The pound retreated on Thursday after the Bank of England (BoE) struck a more cautious tone than expected following its latest policy meeting.
As the move was in line with market expectations and accompanied by a dip in core inflation, which suggested to investors that US inflation isn’t overheating, prompting a pullback in Treasury yields, the US dollar weakened as well.
Even so, lingering market anxiety over the Covid-19 crisis and a stronger-than-expected Michigan consumer sentiment index helped USD exchange rates to recover some ground on Friday.
The index’s rise from 76.8 to 83 encouraged a greater sense of optimism in the health of the world’s largest economy, even as pandemic disruption continues to linger.
Fresh volatility could be in store for the US dollar this week on the back of the Federal Reserve’s latest policy announcement.
If the Fed shows any willingness to consider further monetary loosening measures to help shore up the economy, the appeal of the US dollar could weaken.
On the other hand, evidence that the central bank remains prepared to keep policy on hold for the time being may encourage USD exchange rates to push higher across the board.
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)