GBP/EUR rallies back above €1.10 as BoE’s Haldane cools negative rate speculation

The pound mounted a comeback on Wednesday, strengthening as the Bank of England (BoE) sought to pour more cold water on suggestions the bank could soon cut interest rates below zero.
 
Sterling looks to be consolidating these gains this morning, with GBP/EUR flat at €1.1011 and GBP/USD stable at $1.2928. GBP/CAD is trading narrowly at C$1.7186, while GBP/AUD and GBP/NZD hold steady at AU$1.7985 and NZ$1.9487, respectively.
 
Coming up today, notable US economic data will likely be in focus as USD investors look for any signs the US economic recovery may be slowing again.
 

What’s been happening?

The pound was back on the offensive yesterday, rallying in response to comments from BoE chief economist Andy Haldane.
 
Haldane warned against 'Chicken Licken' pessimism in the UK threatening the country’s economic recovery, while also adding his voice to recent attempts by the BoE to play down speculation that the bank is planning an imminent move to negative interest rates.
 
This uptick in Sterling was further supported by the UK’s latest GDP figures after the final release for the second quarter saw economic growth revised slightly higher.
 
At the same time, the euro was undermined by comments from European Central Bank (ECB) President Christine Lagarde as she expanded on her recent dovish comments by warning that low inflation in the Eurozone poses fundamental challenges to the ECB.
 
Meanwhile, the US dollar was mostly rangebound on Wednesday, with the ‘Greenback’ relinquishing its post-debate gains despite a stronger-than-expected ADP employment report.
 

What’s coming up?

In the spotlight today we have some high profile US data releases, which could stoke some volatility in the US dollar.
 
Up first is the latest US personal spending index, where a slowing of spending following a sharp contraction of household income in August could drag on USD exchange rates.
 
However, the subsequent release of September’s ISM manufacturing PMI could offer some support to the US dollar if US factory activity continued to expand as expected last month.
 
The euro could face some additional pressure this morning as the Eurozone is expected to report unemployment in the bloc continued to accelerate in August.
 
Last but not least, the ongoing focus on Brexit could infuse volatility in the pound today. Will lingering uncertainty drag on Sterling sentiment or could reports of positive progress towards a trade deal help to turbo charge GBP exchange rates?