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tmsnrt.rs/2egbfVh* Graphic: World FX Rates in 2020 by 3 Min Read* Since the Brexit referendum, the sterling has been trade-weighted. tmsnrt.rs/2hwV9Hv (Reuters) – LONDON, July 1 (Reuters) – On Thursday, the pound sank after Bank of England Governor Andrew Bailey advised against overreacting to Britain’s rising inflation. At 0835 GMT, the pound was 0.2 percent weaker against the dollar, trading at $1.3796. It fell 0.1 percent to 85.85 pence against the euro after rising about 5% against the euro in the first half of the year. In his annual Mansion House speech on Thursday, Bailey stated that it was critical to ensure that the recovery was not jeopardized by a premature tightening of monetary conditions, as a rise in inflation was only likely to be temporary. Last week, sterling was one of the worst-performing G-10 currencies after the Bank of England maintained the scale of its stimulus program and stated that inflation will exceed 3%, but that the rise above its 2% objective would be only temporary. However, analysts said cable was holding up well against a rising dollar after the Federal Reserve of the United States announced it would raise interest rates and cease its emergency bond-buying program sooner than planned. In a note to clients, ING analysts wrote, “Sterling continues to demonstrate decent resilience to the dollar’s appreciating pressure compared to other G10 peers, with markets still reluctant to price in a risk premium associated to the quick spreading of the Covid-19 Delta variant in the UK.” Although daily confirmed cases have been increasing in the United Kingdom for weeks, a quick vaccination program appears to have weakened the relationship between infections and mortality. The European Union decided this week to prolong a customs exemption for chilled beef imports to Northern Ireland. The EU agreed to extend the grace period, which was set to end on July 1, by three months in order to soothe post-Brexit tensions over the so-called “sausage row.” The post-Brexit disagreement has had little impact on the pound so far, according to currency analysts, but that might change. “With political divergences still visible, the danger of a re-escalation of trade hostilities between the EU and the UK is all but certain,” ING warned. (Joice Alves contributed reporting, and Emelia Sithole-Matarise edited the piece.)/nRead More

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