| LONDON, Sept 12
LONDON, Sept 12 Sterling traded flat against the
dollar on Monday after recording its first week of losses in
four, as investors awaited comments from Federal Reserve
officials for further clues on whether U.S. interest rates will
be hiked soon.
The dollar rallied on Friday, hitting a one-week high of
$1.3239 against sterling, as bets that U.S. rates will
rise this year - perhaps as soon as this month - were revived by
hawkish comments from Boston Fed President Eric Rosengren.
The pound had been on a winning streak up until last
Tuesday, hitting a seven-week high of $1.3445 that left
it more than 5 percent up from a three-decade low plumbed in
July following Britain's vote to leave the EU.
But it has since fallen around 1.5 percent, having taken a
hit last week after Bank of England Governor Mark Carney kept
the option of further monetary easing on the table. It traded
flat on Monday at $1.3271, close to Friday's low of $1.3239.
It was also flat at 84.70 pence per euro.
The BoE meets on Thursday and is not expected to announce
new policy measures, having cut interest rates to record lows
and reintroduced an asset-purchase programme last month. But
investors will be on the look-out for clues about further action
in coming months.
"I don't think many people are anticipating much by way of
policy this week. November is more likely," said Rabobank
currency strategist Jane Foley. "We've had better data, meaning
the Bank can stay in wait-and-see mode for at least this month."
"I think Carney will need more justification, in terms of
weaker data, before he pulls the trigger (on further policy
action)," she added.
Investors' primary focus on Monday will be a speech by Fed
Board Governor Lael Brainard, the Fed's most noted dove, with
some expecting her to send a signal that monetary tightening is
Money markets are pricing in around a one in four chance
that rates will be hiked later this month, according to CME
FedWatch, and around a 60 percent chance of a hike by the end of
"Brainard is among the few FOMC members that have not
already expressed their view on the outlook for policy ahead of
the September meeting," wrote IronFX analyst
"As such, we believe that her speech has the potential to
influence market expectations for a hike this year, especially
considering that she is a permanent voting member of the FOMC."
(editing by John Stonestreet)