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Pound slumps on dovish BoE Bailey comments

currency-newsPound slumps on dovish BoE Bailey comments
The pound stumbled on Monday, following a dovish speech from Bank of England (BoE) Governor Andrew Bailey.

Sterling is licking its wounds this morning, with GBP/EUR subdued at €1.1906 and GBP/USD muted at $1.3101. GBP/CAD is rangebound at C$1.6379, while GBP/AUD and GBP/NZD hold steady at AU$1.7439 and NZ$1.8966, respectively.

Coming up, will another strong JOLTs job openings print help to propel the US dollar higher this afternoon?


What’s been happening?

The pound stumbled out of the gates this week, in response to dovish comments from Bank of England Governor Andrew Bailey.

In a speech titled ‘Macroeconomic and Financial Stability in Changing Times’, Bailey reiterated the bank’s cautious outlook. Responding to a question regarding a potential rate hike in May, Bailey warned that both Covid and the war in Ukraine means future interest rates are highly uncertain.

Meanwhile, the euro initially firmed on Monday amidst hopes for progress in Ukraine-Russia peace talks after Ukrainian President Volodymyr Zelenskiy said his country is willing to discuss adopting a neutral status.

However, these gains faded after it emerged that the current round of talks would be delayed until at least Tuesday.

Across the pond, the US dollar was underpinned by rising US Treasury yields, amidst growing expectations the Federal Reserve will deliver several more interest rate hikes this year.

What’s coming up?

Kicking off today’s European session was the publication of Germany’s latest consumer confidence figures.

April’s release is likely to put pressure on the euro this morning, after reporting household morale plummeted amidst the uncertainty posed by the war in Ukraine and its potential to stoke inflationary pressures in Europe.

For USD investors the focus will be on the publication of the latest US Job Openings and Labour Turnover survey (JOLTs). Another solid reading could bolster the US dollar as any further signs of a tightening labour market will bolster Fed rate hike bets.

Finally in the absence of any notable UK economic data, the pound could struggle to find any strong directional bias today.
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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