LONDON (Reuters) -Sterling held steady on Monday as traders brushed off news of a possible end to the U.S. federal government shutdown and instead awaited important economic data this week to see what it might mean for the Bank of England.
The pound was last up 0.08% at $1.3175 and was a whisker firmer against the euro at 87.83 pence to the common currency.
It also finished last week little changed. While the Bank of England held interest rates steady on Thursday, voting was tight enough – five policymakers voted to hold and four to cut – to outweigh any sterling-positive impulse as the market’s focus immediately shifted to December’s meeting.
That means this week’s economic numbers will be important.
“Data evolution remains key for (Monetary Policy Committee) pricing, particularly as Governor Bailey’s swing vote was explicitly data dependent,” said analysts at Barclays in a note.
“This week’s employment report (Tuesday) and flash Q3 GDP release (Thursday) are key in that regard.”
Current market pricing sees a 25-basis-point cut in December as more likely than not, though not a done deal.
Traders are also looking ahead to late November’s UK budget. Analysts expect that finance minister Rachel Reeves will raise taxes, though the precise changes remain to be seen, amid broad speculation in British media.
Signs U.S. lawmakers were close to reopening the federal government gave support to equity and bond markets on Monday, but moves in currency markets were limited to the safe-haven Japanese yen and risk-sensitive Australian dollar. [FRX/]
The pound shed 0.4% on the Aussie and gained 0.5% on the yen, in line with similar moves by the dollar and euro.
(Reporting by Alun John, Editing by Joe Bavier)
