"The important question for me with regard to the pound is how much of that existing hawkish tone is already priced into the pound," she said.
Asked how much of the messages from other central banks about higher interest rates outside Britain had been priced in to the value of sterling, Mann said: "They've been talking hawkish for a while but I think perhaps there's more to go." "Mann's remarks that sterling could fall again is not a good endorsement for the currency particularly since she is the most hawkish member of the MPC (Monetary Policy Committee)," said Jane Foley, Head of FX Strategy at Rabobank London. "Mann was referring to the hawkishness of the Fed driving the U.S. dollar higher vs. the pound, but it can be inferred from this remark that she doesn’t expect BoE policy to match the pace of the Fed," Foley added. The pound has slipped around 0.25% against the dollar so far in March , compared with a gain of nearly 0.9% for the euro versus the dollar.
Money markets are pricing in that the BoE interest rate will peak in September at 4.75%. It currently stands at 4% after ten rate increases in a row since late 2021.
Traders are also attaching a 93% chance of a 25-basis-point rate increase when the central bank meets to decide policy on March 23. There's no probability priced in that the bank could raise rates by more than that. . On the other hand, markets are expecting bolder moves from the Fed and the ECB until July, with the U.S. central bank expected to hike rates to 5.5% from 4.5-4.75% now, and the ECB to increase rates to 4% from their current 2.5%.
Sterling was down 0.3% against the dollar to $1.1988, after briefly rising to a one-week high in early London trading when data showed British house prices jumped unexpectedly in February, mortgage lender Halifax said. Against the euro , sterling was 0.16% lower at 88.95 pence.
Mann's comments came ahead of testimony before Congress by
Fed Chair Jerome Powell.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: World FX rates in 2022 Graphic: Trade-weighted sterling since Brexit vote ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Joice Alves in London, Editing by Kirsten
Donovan)
