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On Monday, the British pound held its ground against both the euro and the U.S. dollar, showing little reaction to the latest wave of tariff volatility as market participants awaited a key speech from Bank of England (BoE) policymaker Catherine Mann and the upcoming release of business activity data.
The pound saw a marginal increase of 0.08% against the dollar, trading at $1.2407, while remaining steady against the euro at 83.2 pence.
Major currency movements on Monday were instead dominated by those of significant steel and aluminum exporters, responding to President Donald Trump’s announcement on Sunday of new 25% tariffs on imports of these metals into the United States. These developments are considered less directly impactful to the UK, and as a result, they did little to bolster the pound’s position against the euro.
Later in the week, the pound could face more influential news. Paul Mackel, global head of FX research at HSBC, noted that the week would be noteworthy for the currency with Mann’s speech on ’Economic Prospects’ scheduled for February 11 and the release of the UK’s January activity data on Thursday.
Catherine Mann, previously regarded as a hawkish figure on the BoE’s Monetary Policy Committee for her stance on maintaining interest rates last year, pivoted unexpectedly last week, endorsing a rate cut of 50 basis points, a more aggressive stance than most of her colleagues. The BoE ultimately decided on a smaller rate cut of 25 basis points.
Mann had suggested in December that a more ’activist’ approach to the policy rate might be necessary, a viewpoint reflected in her recent vote for a substantial rate reduction.
The reasoning behind her changed perspective remains a topic of interest, particularly in light of the potential for tepid growth numbers to emerge on Thursday, which could justify Mann’s shift and potentially affect the pound’s value. The UK government will also be closely monitoring this week’s economic reports, which include GDP data.
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