Sterling Stable, Political Headlines Could Be a Time Bomb
The pound sterling remained safe in the European session on Tuesday (February 10th)—moving around $1.3675 and down slightly by approximately 0.14%. However, it remains below its late-January peak of $1.387, so the market is not yet confident in declaring a "breakout."
What's keeping sterling resilient isn't just data, but also the political drama in London. Pressure on Prime Minister Keir Starmer has increased following the storm of rumors surrounding Peter Mandelson and its impact on the government—even Anas Sarwar (leader of Scottish Labour) has openly called for Starmer to resign.
On the other hand, there are signs of stabilization as Starmer still has the support of several party leaders—at least enough to dampen panic selling. But for FX traders, the leadership issue remains "noise" that makes the pound volatile with every new headline.
A second factor holding back GBP's momentum: the market is increasingly convinced that the Bank of England will adopt a more dovish stance. The Bank of England (BoE) held interest rates at 3.75%, but its tone of communication left room for further easing—the BoE even projected CPI inflation could return to its 2% target starting in April.
Source: Newsmaker.id
