The pound retreated on Thursday after the Bank of England (BoE) struck a more cautious tone than expected following its latest policy meeting.
While the monthly growth rate clocked in at -2.9%, rather than the forecast -4.9%, this was not enough to give investors any particular sense of encouragement.
With growth momentum still proving negative, the risks of a first quarter contraction continued to rise, to the detriment of GBP exchange rates.
The pound came under further pressure after data published by the Office for National Statistics (ONS) at the end of last week reported a 40% slump in UK exports to the EU.
A deepening decline in the latest manufacturing and industrial production figures also put a dampener on GBP exchange rates ahead of the weekend.
However, the mood of GBP exchange rates could see some improvement this week if the Bank of England adopts a less dovish tone at its March policy meeting.
Even though policymakers look set to keep monetary policy on hold for the foreseeable future, any expression of confidence in the economic outlook could help to shore up the pound.
On the other hand, signs of increased caution within the central bank may leave the pound vulnerable to a fresh bout of selling pressure on Thursday.
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)