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3 Minutes to Read tmsnrt.rs/2egbfVh* Graphic: Trade-weighted sterling since the Brexit vote tmsnrt.rs/2hwV9Hv (Updated with movement following the release of U.S. jobs data) Reuters, LONDON, July 2 – The pound held steady against the dollar on Friday, recovering from two-month lows as the dollar fell following the release of US jobs data. Earlier on Friday, sterling fell to new two-month lows versus the dollar, weighed down by the Bank of England governor’s dovish remarks. Andrew Bailey said in his annual Mansion House speech on Thursday that it was critical to ensure that the recovery was not harmed by a premature tightening of monetary conditions, because a rise in inflation was only likely to be short. The pound fell to its lowest level since April 16 as a result of Bailey’s remarks, with the currency trading at $1.3745 in London morning transactions. However, sterling recovered some ground when the dollar was pulled down by some weaker specifics in an otherwise good overall US jobs data, trading 0.15 percent higher at $1.3782 by 1430 GMT. It was 0.2 percent higher against the euro, at 85.94 pence. ING pointed out that, unlike interest rate futures markets in the United States, sterling markets are in the process of reverting to hawkish pricing observed in late June. “The pound’s recent run of outperformance came to an end yesterday as BoE Governor Bailey stated that the Bank of England should not overreact to the inflation spike,” ING said in a note to clients. “Sterling looks a little vulnerable to a further BoE re-pricing in the short term, and euro-sterling could see a decent rally if resistance at 0.86.10-15 pence is broken,” it added. Money markets had previously priced in a ten-basis-point rate hike by the Bank of England in May 2022. 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. The decision by the European Union to prolong a three-month exemption on customs inspections on chilled meat imports to Northern Ireland gave the pound some support against the euro this week. Ritvik Carvalho contributed reporting, and David Evans and William Maclean edited the piece./nRead More

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