LONDON (Reuters) – The pound on Friday was on track for a weekly gain against the dollar as traders digested the US election results and a new bond-buying spree from the Bank of England.
Currencies considered riskier, including the pound, strengthened as Democratic candidate Joe Biden took over the leadership of President Donald Trump in key states, putting him on the verge of winning the White House.
The pound was up more than 1% for the week against the vastly weaker dollar, although it fell about a fifth percent over the course of the day, trading around the $ 1.31 mark.
The pound lost ground elsewhere against the euro – one of the biggest gains this week – falling around 0.5% over the course of the day.
Concern over the terms of Britain’s exit from the European Union still weighed on the pound after EU senior official Thierry Breton said there was a “50/50” chance of a trade deal, with negotiations which are expected to continue over the weekend.
Britain is confident it has made important preparations for the end of its Brexit transition period, a spokesman for Prime Minister Boris Johnson said.
On Thursday the Bank of England said it was increasing the size of its already huge stimulus to purchase bonds by £ 150 billion ($ 197 billion) larger than expected as it braced for more economic damage from coronavirus lockdowns.
BoE Deputy Governor Ben Broadbent said on Friday that the central bank expects more than 9 million employees to be in the government’s extended license labor support program in the spring.
“While the (BoE) Monetary Policy Committee (MPC) increased the Asset Purchase Facility by £ 150 billion, more than the £ 100 billion that the market had expected, there has been no change in rates and, significantly, no mention of negative rates, ”Marshall Gittler, head of investment research at BDSwiss Group, said in a statement.
Furthermore, the MPC predicted that inflation would return to the target level of 2% by the end of next year, even without further rate cuts. Now that it’s out of the way, it’s back to worrying about Brexit. “
Reported by Iain Withers; editing by Larry King