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GBP/USD approaches $1.32 on upbeat BoE outlook

currency-newsGBP/USD approaches $1.32 on upbeat BoE outlook
The pound is bullish again this morning and looking to refresh its recent highs in the wake of the Bank of England’s (BoE) latest policy meeting.
The BoE’s positive tone has already been reflected in Sterling, with GBP/EUR buoyed at €1.1075 and GBP/USD climbing to $1.3171. GBP/CAD jumped to C$1.7462, while GBP/AUD and GBP/NZD have accelerated to AU$1.8296 and NZ$1.9838 respectively.
Also of note to today will be Germany’s latest factory order figures as a dramatic surge in June offers the euro the chance to rally further.

What’s been happening?

Trade in the pound was mixed on Wednesday, with the UK currency refreshing a four-month high against the US dollar but stumbling against the majority of its other peers.
This lacklustre performance by the pound came as Sterling sentiment continued to be buffeted by fears of a second wave of coronavirus infections in the UK as well lingering Brexit uncertainty.
On top of this GBP investors were reluctant to place any aggressive bets ahead of today’s BoE decision.
The US dollar, meanwhile, fell sharply through yesterday’s trading session on the back of some alarming US jobs data.
According to the ADP employment report, US employment growth rose by 167,000 in July, well below forecasts for a 1,500,000 expansion and stoking fears the US economic recovery is stalling.
Amid the weakness of its peers, the euro was well positioned to rally on Wednesday thanks to a robust services PMI and a stronger-than-expected annualised retail sales print in June.

What’s coming up?

Kicking off today’s session was the Bank of England’s latest rate decision.
While no policy changes were made, the Pound reacted positively to policymakers’ lack of appetite for negative interest rates as well as a substantial upgrade to the BoE’s growth forecasts.
Also potentially influencing GBP exchange rates today will be the UK’s latest construction PMI, with another robust expansion in the construction sector potentially offering some more support to Sterling.
At the same time, the euro will look to maintain its upward momentum through today’s session after data published earlier this morning revealed a massive increase in German factory orders in June.
Finally, in the US the focus will be on efforts to pass a deal on the next round of US fiscal stimulus.
While the previous stimulus package expired at the end of July, Republicans and Democrats remain at an impasse over the next round, leaving millions of US families in a precarious financial state and dampening hopes for a swift US economic recovery.
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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