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Can pound hold onto gains after Bank of England Inflation Report?

business-articlesCan pound hold onto gains after Bank of England Inflation Report?
  • Pound looks vulnerable ahead of Bank of England meeting minutes and Inflation Report
  • Solid manufacturing PMI may shore up Canadian dollar
  • US dollar to extend bullish run on positive data
 
 
Bank of England set to provoke pound volatility
 
The pound could come under renewed pressure today on the back of the Bank of England’s (BoE) meeting minutes and quarterly Inflation Report.
 
Although investors do not expect to see any change in policy at this stage the nature of the minutes could shift bets on the likely timing of the next BoE interest rate move.
 
On the other hand, revisions to growth and inflation forecasts in the Inflation Report could drive GBP exchange rates into a fresh downtrend this afternoon.
 
If the BoE indicates less confidence in the domestic outlook the pound is likely to slide lower, with Brexit-based uncertainty looking set to increasingly weigh on the economy in the months ahead.
 
 
Can manufacturing PMI return Canadian dollar to a stronger footing?
 
After yesterday’s mixed Canadian growth data CAD exchange rates could find a rallying point on the October manufacturing PMI.
 
Evidence of resilient activity within the Canadian manufacturing sector should encourage greater confidence in the outlook of the wider economy.
 
However, another disappointing showing would leave the Canadian dollar exposed to a fresh bout of selling pressure.
 
Developments in the oil market may drive further CAD exchange rate volatility in the near term, meanwhile.
 
 
Robust manufacturing sector to give US dollar fresh boost
 
The US dollar is looking to extend its bullish run today with the release of October’s ISM manufacturing index.
 
Another strong piece of domestic data, signalling robust growth within the manufacturing sector, should give USD exchange rates a fresh boost.
 
Anything less than a significant downside surprise is unlikely to particularly weigh on the dollar, with the odds of imminent Federal Reserve policy action still high.
 
As markets brace for tomorrow’s non-farm payrolls report, though, the upside potential of the US dollar is likely to prove muted for the time being.
 
 
Upcoming Data:
 
Thursday, 1st November 2018
12:00 GBP Bank of England Rate Decision
12:00 GBP Bank of England Inflation Report
13:30 CAD Manufacturing PMI
14:00 USD ISM Manufacturing Index
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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