Pound Sterling Traders Focus on Oil Prices and ECB Rate Hike

The Pound Sterling is trading mixed on Thursday, as investors focus less on UK news and more on the impact of rising oil prices above $100 and the upcoming ECB rate hike.

Brent crude has surged to a new high after recent tanker attacks exacerbated supply fears, pushing the market back towards inflation risks and tighter central bank reaction functions. The US Treasury's decision to lift the size of its long-dated buyback operation to as much as $6bn has failed to calm long-term yields, which continue to rise.

The ECB is expected to raise interest rates by 25 basis points to 2.50% today, with investors watching for signs of a potential further hike if energy prices keep inflation above target. Meanwhile, the Pound is trading positively against some currencies, including the New Zealand Dollar, while remaining weak against others like the Japanese Yen.

The Yen's strength is driven in part by Bank of Japan board member Kazuyuki Masu's warning that the central bank may need to raise rates rapidly if inflation accelerates. The Pound's performance varies across different currencies, with some crosses showing resilience despite the overall weakness.