Pound tumbles, markets await BoE policy meeting

Philip McHugh May 8th 2018 - 2 minute read

Pound tumbles, markets await BoE policy meeting

The pound fell back again last Friday as the currency was seen as increasingly vulnerable ahead of the Bank of England’s rate decision this week.

Sterling continues to struggle this morning with GBP/EUR edging lower at €1.1359 and GBP/USD tumbling to $1.3534. While GBP/AUD and GBP/NZD are both on hold at AU$1.8050 and NZ$1.9300 respectively. Only GBP/CAD appears to be showing any positive movement today as it rises to C$1.7514.

The US dollar is forecast to continue to punch higher this afternoon, should the US job openings have risen in March, as expected…

What’s been happening?

The pound continued to trend lower at the end of last week’s session as markets appeared increasingly reluctant to touch the currency ahead of the BoE’s rate decision later this week.

The vast majority of analysts agree that the BoE will choose to stay its hand this month, with a run of soft UK data all but eliminating any chances of policymakers voting for a rate hike on Thursday.

Markets are now considering that a hike may be possible in August, but this will likely be dependent on whether the bank opts for a ‘hawkish hold’ this month.

The release of the Eurozone’s weaker-than-expected retail sales figures helped prevent the GBP/EUR exchange rate from trading lower on Friday.

Sales growth was shown to have crept up by only 0.1% in March, falling notably short of an expected rise to 0.5% and further highlighting the Eurozone’s slow start to 2018.

Meanwhile the GBP/USD exchange rate continued to spiral lower at the end of last week’s session, with the latest uptick in the US dollar being driven by a faster-than-expected fall in the US unemployment rate as it tumbled to a 17-year low of 3.9% in April.

What’s coming up?

The release of the UK’s latest house price index means the pound is likely to struggle during today’s session as figures released earlier this morning revealed national house prices fell faster than expected in April.

The release of the latest US job opening figures may help the US dollar to continue to punch higher this afternoon as economists forecast that the demand for labour will have continued to strengthen in March.

Meanwhile following on from the release of Germany’s latest industrial production figures earlier this morning there appears to be little other data to propel the euro, possibly allowing the single currency to consolidate its early gains.

Written by
Philip McHugh

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