Pound Continues to Benefit from Broader Risk Appetite, With BoE on Hold

The Pound is looking to put in its fifth positive day out of the last six as it continues to trend higher on the back of a clearer political picture and broader optimism. Sterling started the day on a weak note but polls showing that the Conservative party is poised to take a majority in the government raised hopes that measures needed to reduce the budget deficit will be passed. However, earlier weakness was attributed to a pull back in risk appetite, but a rebound in stocks on the back of strong earnings and manufacturing data helped the GBP/USD end the session in the black. Indeed, we see that the Dow and the pair continue to hold a strong correlation at 39% which has remained firm over the past month. The BoE continuing to pause their asset purchase program has seen U.K. interest rate expectations lose their influence over direction which has faded to 8% from 18% a month ago.

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