How quick the Fed is going to slam on the brakes: pound

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How quick the Fed is going to slam on the brakes: pound

This illustration was taken January 6, 2020 by the U.S. dollar banknotes. REUTERS Dado Ruvic Illustration File Photo

Let's take a break from how quick the Fed is going to slam on the brakes to contain inflation and talk about sterling.

The pound is one of the best performing major currencies in the early days of 2022, and it is one of the best performing in the early days. It is trading close to its highest level in over two months above $1.37 due to signs that the Omicron COVID surge is abating and expectations that UK interest rates could rise as soon as February.

The economy in Britain grew faster than expected in November, according to data released on Friday. As week draws to an end, there is a question mark as to how long the rally will last given rising political uncertainty. Prime Minister Boris Johnson's leadership is in the balance as he faces calls to resign from some in his party over Wednesday's admission that he attended staff drinks during the May 2020 lock-down. On Friday, there were reports of parties in Downing Street. If the number of bank research notes this week reminding clients of the rules of a potential leadership challenge to Johnson is anything to go by, sterling bulls be warned.

In March, Governor Lael Brainard was the latest and most senior U.S. central banker to signal that rates will rise in March to combat inflation. Asian shares took a beating from rate-hike unease, Japan's Nikkei fell 1.3% and the dollar index is close to two month lows, showing that tighter policy is already well priced into the greenback.

The world's most indebted developer secured a crucial approval from onshore bondholders to delay payments on one of its bonds, as more developers race to avert defaults, leading to HK edged up. Key developments that should give more direction to markets on Friday:

In December China posted a record trade surplus and read more in 2021.