The pound retreated on Thursday after the Bank of England (BoE) struck a more cautious tone than expected following its latest policy meeting.
Meanwhile, the pound is mostly muted so far this morning, with GBP/EUR flat at €1.1678 and GBP/USD sliding to $1.3944. GBP/CAD is rangebound at C$1.7516, while GBP/AUD and GBP/NZD hold steady at AU$1.7992 and NZ$1.9397, respectively.
In the spotlight today we have the UK’s latest GDP figures, where confirmation that economic growth dived in January is likely to weigh on GBP exchange rates.
What’s been happening?The euro ticked lower during yesterday’s session, with the single currency coming under pressure following the ECB’s latest rate decision.
While the ECB opted to leave interest rates on hold as expected this month, EUR investors were a little surprised by how dovish the bank was in announcing it is ready to buy bonds at a ‘significantly’ higher pace.
Meanwhile, the US dollar remained on the defensive through yesterday’s European trading session, with demand for the safe-haven currency being knocked by optimism over the passing of Biden’s stimulus package as well as the continued slump in US Treasury yields.
These losses were tempered slightly by the publication of the latest US employment data, however, as USD investors welcomed a larger-than-expected fall in jobless claims last week.
At the same time, in the absence of any clear catalyst, the pound was mostly driven by external forces yesterday, strengthening as the US dollar and euro weakened.
What’s coming up?Kicking off today’s session was the publication of the UK’s latest GDP figures.
January’s monthly release revealed that, unsurprisingly, the UK economy contracted at the start of 2021 as the latest national lockdown came into force. While the slump was smaller-than-expected, it may still cap any upside in the pound today.
For EUR investors, the focus today will be on the Eurozone’s latest industrial production release. This could offer some modest support to the euro later this morning if factory output in the bloc rebounded as expected in January.
Closing out this week’s session will be the publication of the University of Michigan’s US consumer sentiment index.
This is expected to report US household sentiment improved again this month, potentially helping the US dollar to trim some of its recent losses.
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)