The pound retreated on Thursday after the Bank of England (BoE) struck a more cautious tone than expected following its latest policy meeting.
Investors still saw little risk of the central bank making greater dovish moves in the months ahead, limiting the downside pressure on the single currency.
A surprise uptick in January’s Eurozone industrial production data also helped to shore up the euro once again.
As production rebounded 0.8% on the month in January, this encouraged bets that the manufacturing sector could help to limit the risks of a first quarter economic contraction.
If the latest German ZEW economic sentiment index shows a fresh improvement on the month, the appeal of the euro could strengthen further.
As long as the Eurozone’s powerhouse economy looks set to deliver a more robust performance in the first three months of 2021, this could limit the downside potential of EUR exchange rates.
Even if ECB policymakers take a more dovish stance in fresh comments this week, the potential for euro losses appears limited.
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)