LONDON – The pound struggled to gain momentum on Monday, but was still close to its strongest versus the euro since February 2020, as investors focused on the possible pace of monetary policy tightening after the Bank of England meeting last week.
In recent weeks, sterling has outperformed as COVID-19 cases have fallen and high vaccination rates have allowed the British government to lift most social-distancing rules.
The pound has strengthened versus the euro for the last three weeks in a row, and on Friday reached 84.7 pence per euro, its strongest since February 2020.
But on Monday, it opened slightly lower, then crept up during the morning session. Currency markets were digesting a strong US jobs report on Friday, which prompted investors to bring forward their bets on the Federal Reserve tapering its pandemic-era stimulus and sent the dollar to a four-month high against the euro during Asian trading.
At 11:01 GMT, the pound was flat on the day at $1.388. Versus the euro, it was up by less than 0.1%, at 84.675 pence per euro, Reuters reported.
On Thursday, the Bank of England’s monetary policy committee (MPC) voted 7-1 to maintain the pace of its government bond-buying, even though it expects inflation to jump to 4.0% around the end of the year. But it also said “some modest tightening” of monetary policy over its three-year forecast period was likely to be necessary.
