Pound Spikes Up As BoE Bailey Downplays Negative Rate Hopes

The pound was higher against its major counterparts during European deals on Tuesday, after Bank of England Governor Andrew Bailey downplayed expectations of taking interest rates negative to stimulate the economic growth.

In an online speech to the Scottish Chambers of Commerce, Bailey said that the monetary policy committee is debating the merits of negative interest rates.

It has a lot of implications such as reducing bank profits, he added.

The third national lockdown to contain the spread of the coronavirus will delay the economic recovery.

The resurgence in COVID-19 cases would 'delay, probably, the trajectory' of recovery.

Data from the British Retail Consortium showed that UK retailers logged the worst year on record for sales growth due to the Covid-19 pandemic.

In 2020, total retail sales decreased 0.3 percent, the worst annual change since records began in 1995.

The pound jumped to 0.8933 versus the euro, its biggest level since December 1. If the pound continues its rise, 0.88 is possibly seen as its next resistance level.

The pound climbed to a 4-day high of 1.3607 against the greenback from Monday's close of 1.3510. On the upside, 1.42 is likely seen as the next resistance level for the pound.

The pound advanced to more than a 4-month high of 141.80 against the yen and an 8-day high of 1.2110 against the franc, compared to yesterday's closing values of 140.88 and 1.2026, respectively. The pound is likely to find resistance around 144.00 against the yen and 1.24 against the franc.