Sterling fell in European trade away from eight-week highs against dollar and on track for the first loss in three days on active profit-taking.
The pound continues to be the top performing currency since the global banking crisis started three weeks ago due to strong confidence in the UK banking system.
GBP/USD fell 0.25% to 1.2309, with a session-high at 1.2341, after closing up 0.45% yesterday, hitting eight-week highs at 1.2349 following Bank of England Governor Andrew Bailey’s speech.
Bailey
BoE Governor Andrew Bailey said there’s still a need for multiple more rate hikes if signs of inflationary pressures persisted.
Bailey asserted the need to stay vigilant of any signs of heavy inflation, which will require further policy tightening.
However it was clear from this speech that he doesn’t see a threat to the financial stability in the UK as British banks maintain their flexibility and strong capital.
Analysis
The pound remains one of the strongest performing currencies in the G10 countries so far, with analysts linking the strength to the strong performance by British banks compared to European and US banks.
