Pound exchange rate flat as BoE’s August rate plans remains unclear

Philip McHugh July 24th 2018 - 2 minute read

The pound remained muted at the start of this week, with markets still uncertain as to whether the Bank of England will raise interest rates next month.

Sterling continues to hold steady this morning, with GBP/EUR muted at €1.1214, GBP/USD flat at $1.3118 and GBP/CAD subdued at C$1.7282, while GBP/AUD and GBP/NZD hold steady at AU$1.7784 and NZ$1.9324 respectively.

Looking ahead, the euro looks poised to slide this morning, should the Eurozone’s latest PMI figures print in line with expectations…

What’s been happening?

The pound was trending in a narrow range throughout Monday’s trading session, with markets reluctant to make a move ahead of a speech by Bank of England (BoE) Deputy Governor Ben Broadbent.

This was to be the first communication since last week’s run of soft data and markets were hoping he would offer some hints regarding how the bank is likely to vote next week.

GBP investors were left empty handed however as Broadbent, speaking to Reuters, suggested he was still undecided on whether the bank should raise interest rates in August.

Outside of a brief uptick in the middle of the session, the GBP/EUR exchange rate was largely flat on Monday, with the Eurozone’s latest consumer confidence reading having little impact on the euro as sentiment remained unchanged in July.

Meanwhile the GBP/USD exchange rate edged lower at the start of this week’s session, with demand for the US dollar being bolstered by a slight uptick in US Treasury yields.

However the pairing was prevented from registering any major losses as the USD exchange rate’s gains were capped by some weaker-than-expected US housing figures.

What’s coming up?

Looking ahead, the Confederation of British Industry (CBI) will publish its latest industrial orders figures this morning, with an expected fall in factory orders in July likely to weaken Sterling sentiment.

However the pound may be prevented from falling should the CBI’s accompanying business optimism index reveal businesses became more confident in the third quarter.

The release of the Eurozone’s initial PMI estimate for July could drag on the euro today as economists forecast the data will reveal that private sector activity will have begun to slow again this month, following a brief uptick in June.

Meanwhile a lull in impactful data may stifle movement in the US dollar today, although the currency could still find some momentum should President Trump continue to unsettle markets via his Twitter.
 

Written by
Philip McHugh

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