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How will the BoE meeting impact the pound?

business-articlesHow will the BoE meeting impact the pound?
  • Softer UK inflation offers support to the pound
  • Euro weakens as German business sentiment slides
  • US dollar recovers losses
 
Pound stabilises before BoE policy announcement
 
A softer headline UK consumer price index reading offered some relief to households, having the potential to limit some of the impact of the Covid-19 crisis.
 
However, the pound may struggle to hold onto its positive footing today as anticipation mounts for the Bank of England’s (BoE) scheduled policy meeting.
 
While the bank has issued two emergency interest rate cuts over the last fortnight the fact today’s meeting is still going ahead implies further action could be planned.
 
 
Latest ECB commentary set to trigger euro volatility
 
As the German IFO business sentiment index plunged in March the mood towards the euro soured.
 
While the decline in sentiment came as little surprise to investors this still points towards the Eurozone’s powerhouse economy struggling for some time to come.
 
The European Central Bank’s (ECB) economic bulletin may offer the single currency a boost this morning, though.
 
As long as the central bank continues to sound its intention to support the Eurozone economy the downside potential of the could ease.
 
 
Rising unemployment could weaken USD
 
The US dollar opened yesterday on the defensive, as demand for the safe-haven currency was initially muted in light of improved market sentiment following the passing of a US stimulus bill worth nearly $2 trillion.
 
Demand for the ‘greenback’ was then stoked in the latter half of the European session on the back of stronger-than-expected US durable goods figures as well as a rise in US treasury yields.
 
However, the US dollar could dip again following the publication of the traditionally non-influential weekly US jobless claims.
 
This is because USD investors are bracing for a deluge of new claims for the week ending 21st March, with analysts predicting a jump into millions due to mass layoffs from the coronavirus crisis.
 
Upcoming Data:
 
Thursday, 26th March 2020

09:00 EUR European Central Bank Economic Bulletin
12:00 GBP Bank of England Rate Decision
12:30 USD Advance Goods Trade Balance
 
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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