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GBP/USD slips to $1.35 ahead of BoE’s Super Thursday

currency-newsGBP/USD slips to $1.35 ahead of BoE’s Super Thursday
The pound was left muted on Wednesday as a slightly stronger-than-expected PMI release failed to stir any movement in the currency ahead of the Bank of England’s (BoE) latest rate decision.
Sterling remains on the back foot so far this morning, with GBP/EUR dipping to €1.1313 and GBP/USD slumping to $1.3589. GBP/CAD and GBP/AUD have retreated to C$1.7371 and AU$1.7807, respectively, while GBP/NZD is muted at NZ$1.8877.
Coming up, will we see a positive outlook from the BoE help to trigger a rebound in the pound later today?

What’s been happening?

The pound struggled to find any direction during yesterday’s trading session, as GBP investors braced for the Bank of England’s (BoE) upcoming rate decision.
Sterling also showed limited reaction to the UK’s latest PMI figures, which confirmed the service sector shrank last month, but that businesses are growing increasingly optimistic about their future growth prospects.
The euro, meanwhile, remained on the defensive on Wednesday, with the single currency facing its third consecutive day of losses as it continued to be undermined by concerns over the EU’s vaccine woes.
This drop also came in spite of the Eurozone’s consumer price index printing well above expectations, revealing inflation in the bloc rebounded from -0.3% to 0.9% in January.
At the same time, the US dollar maintained its bullish momentum through yesterday’s session, with the currency benefiting from a jump in US treasury yields amidst renewed US stimulus optimism.
However, these gains were tempered somewhat by some positive US data releases, which helped to cheer markets and limit demand for the safe-haven currency.

What’s coming up?

Turning to today’s session, the spotlight will undoubtedly be on the BoE’s first rate decision of 2021.
No policy changes are expected from the BoE this month, but the bank could help propel the pound higher if the UK’s vaccination success results in a positive outlook from policymakers, with Sterling potentially being turbocharged if Governor Andrew Bailey pours more cold water on negative interest rates.
For EUR investors the focus will be on the Eurozone’s latest retail sales figures. Economists are predicting a rebound in sales in December, but in the wake of Germany’s abysmal figures there is the potential for a miss to weaken the euro further.
Finally in the US, the publication of the latest initial jobless claims could take some of the wind out of the US dollar’s sails if claims continued to trend lower last week, bolstering market sentiment.
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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