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Pound muted as BoE postpones next interest rate decision

currency-newsPound muted as BoE postpones next interest rate decision
The pound wavered on Friday as the Bank of England (BoE) announced it would be postponing its September interest rate decision.

Sterling is trending broadly higher this morning. while GBP/EUR slips to €1.1467 GBP/USD has been catapulted to $1.1687. GBP/CAD has climbed to C$1.5177, while GBP/AUD is buoyed at AU$1.6987 and GBP/NZD holds steady at NZ$1.9007.

Looking ahead, will a rebound in UK GDP in July lend some support to the pound at the start of this week?
 

What’s been happening?

The pound was subdued at the end of last week’s session as the BoE announced it would be delaying its next interest rate decision by a week in order to respect a period of mourning following the death of Queen Elizabeth II.

The decision resulted in some cautious trading by GBP investors, and limited any upside potential which may have stemmed from optimism over Liz Truss’s ‘energy price guarantee’.

The euro, meanwhile, was left subdued on Friday after an emergency meeting of EU energy ministers highlighted member’s division over how to deal with Europe’s energy price crisis.

Finally, after falling sharply on Thursday we saw the US dollar rebound at the end of last week’s session, supported by some hawkish Federal Reserve speeches.
 

What’s coming up?

Kicking off this week was the publication of the UK’s latest GDP figures.

Despite printing below expectations July’s figures could provide a boost for the Pound this morning after reporting the UK economy returned to growth following a sharp contraction in June.

For EUR investors the focus will be on the release of Germany’s ZEW economic sentiment index on Tuesday. Will another deterioration in morale in the Eurozone’s latest economy act as a headwind for the euro?

In the meantime, movement in the US dollar could be limited today, with USD investors potentially wary of altering their position in the currency ahead of the latest US inflation release. Another drop in inflation could dampen Fed rate hike bets.
 
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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