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WorldPosted at: Jul 20 2016 3:33PM


Sterling bounces as BoE survey shows limited Brexit vote fallout

By Patrick Graham
London, Jul 20 (Reuters) Sterling rose against the euro and recovered all of the day's losses versus a broadly stronger dollar on Wednesday after a Bank of England survey showed no clear evidence of a general slowing of economic activity after last month's Brexit vote.The survey reported signs that demand for credit was easing and that there were lower expectations for investment spending, but it also said the majority of companies did not expect any near-term impact on capital spending from the vote.That argued against the main narrative that has weakened sterling since the vote to leave the European Union last month: that the economy would tank in the second half of this year, forcing a sharp easing of monetary policy by the Bank of England."This data does look like a positive for sterling," said BNP Paribas strategist Michael Sneyd.
"It plays into that suspicion that things may not be bad as we feared."In the run-up to last month's vote, Britain's jobless rate fell in May to its lowest level since 2005 as the labour market strengthened, a separate report from the Office for National Statistics showed on Wednesday.Sneyd also said BNP's STEER positioning indicator shows bets on further sterling weakness are extremely stretched, and that its analysis, even accounting for a significant deterioration of Britain's capital account, shows fair value for the pound is around
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