The pound may weaken against the dollar whether or not the Bank of England raises interest rates, according to David Bloom, global head of currency strategy at HSBC Holdings Plc.
With a rate increase, “initially the pound will go up,” he said, “but ultimately we’ll turn around” as higher borrowing costs hurt the economy. Bloom was interviewed today by Andrea Catherwood on Bloomberg Television’s “The Pulse.”
“Sterling has risen on the expectation of rate rises, and if these expectations get drawn away then I think sterling will fall back to roughly $1.55,” he said.
The pound slid 0.3 percent to $1.6062 as of 11:09 a.m. in London.
“We’ve got tough times ahead of us in the U.K. and to raise rates now would be totally wrong,” he said. “If the economy starts to turn down and we’ve raised rates now, there’s no coming back from that,” he said.