The Pound Sterling (GBP) to Hong Kong Dollar (HKD) exchange rate softened on Tuesday after the Asian currency posted its biggest three-day gain since 2012 as pro-democracy protests show signs of ending.
Protests began in September when pro-democracy students stormed a government building, which prompted riot police to use pepper spray to clear them out. With anger, mounting other Hong Kong residents joined the students, which then led to clashes between police using tear gas and protestors.
As the protests mounted, the Hong Kong Dollar weakened against all of its major peers and slipped to its lowest level since April as the city’s financial district was overrun with demonstrators.
The protests had been building but as the weekend ended the number of protestors eased prompting both sides to hold talks to end the situation peacefully.
The government and student leaders have agreed on a number of principles, which will see the two sides to hold formal talks on October 12. The markets hope that the talks will lead to a resolution to the standoff.
‘Investors are responding positively to the talks between the government and students. You could see both the Hong Kong Dollar and stocks have rebounded as concerns over the protests have eased,’ said Stella Lee, resident of Success Wealth Management Ltd. in Hong Kong.
The Hong Kong Dollar Advanced to a Session High Against the Pound of 0.0806
A statement released by the Hong Kong Monetary Authority also eased market concerns over the demonstrations as it said that the banking system and financial markets continued to work normally. The HKMA requested that the city’s banks resume normal services as soon as circumstances permit.
‘There seems to be a de-escalation of the situation, but things are still evolving. The Hong Kong Dollar has been very strong, despite some uptick in the US Dollar in previous days,’ said the head of Asian rates strategy at Credit Agricole CIB.
Pound Sterling to Hong Kong Dollar Exchange Rate
The Hong Kong Dollar could make further gains against the Pound if the protests end peacefully over the next week or so.
Sterling meanwhile has come under pressure as a run of economic data releases raises concerns over the strength of the UK economy and the likelihood that the Bank of England (BoE) raising interest rates in the early part of next year.
The main piece of data due for the Pound this week will be Thursday’s Bank of England policy meeting. Policy makers are widely forecast to leave interest rates unchanged at the record low level of 0.5% and leave its monthly bond-buying programme unchanged at £375 billion.
Hong Kong Dollar (HKD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Hong Kong Dollar,12.4854 ,
Euro,, Hong Kong Dollar,9.7991 ,
US Dollar,, Hong Kong Dollar,7.7547 ,
[/table]
