GBP/USD collapses as BoE pumps more money into QE programme

The pound fell sharply against the majority of its peers on Thursday in the wake of the Bank of England’s (BoE) latest policy meeting.
 
Sterling appears to have stabilised this morning however, with GBP/EUR flat at €1.1098 and GBP/USD buoyed at $1.2443. GBP/CAD is rangebound at C$1.6898, while GBP/AUD and GBP/NZD are holding steady at AU$1.8119 and NZ$1.9364 respectively.
 
Will we see the Pound recoup some of its losses today after UK retail sales rebounded in May?
 

What’s been happening?

 
The pound slumped yesterday as the BoE struck a dovish tone in its latest policy meeting.
 
As had been widely expected by economists, the BoE opted to leave interest rates on hold at 0.1% this month, while also announcing it would be expanding its bond buying programme by an additional £100bn.
 
GBP losses came in spite of comments from BoE Governor Andrew Bailey, in which he suggested the decision on negative interest rates is in no way imminent.
 
Meanwhile the US dollar struck higher on Thursday, with renewed fears over a second wave of coronavirus infections leading investors to favour the safe-haven currency.
 
Further boosting the appeal of the ‘Greenback’ was the latest Philadelphia manufacturing index, which revealed a surprise rebound in factory activity last month.
 
This uptick in the US dollar weighed heavily on the euro, with the negative correlation between the two currencies leading EUR exchange rates to weaken amid the absence of any notable Eurozone data.
 

What’s coming up?

 
Turning to today’s session, the pound may look to mount a recovery following the publication of the UK’s latest retail sales figures earlier this morning.
 
These revealed that UK sales growth rebounded last month, with consumer spending rising 5.7% following a record contraction of 18.1% in April.
 
Meanwhile, for EUR investors all eyes will be on a virtual EU summit taking place later this evening. EU leaders are set to begin tough negotiations regarding the €750bn coronavirus relief fund.
 
Closing out this week’s session will be a speech by Federal Reserve Chair Jerome Powell. Powell already made extensive remarks on the Fed’s monetary policy in a testimony to US Congress earlier in the week, but USD investors will still be looking out for more insight into the bank’s outlook for the US economy.