Although GBP movements weren’t as vast as yesterday, they were still significant as sterling dropped below key levels of 1.39 and 1.17 against the USD and EUR respectively. This was ahead of the main market events this week, Thursday’s Bank of England monetary policy meeting and the US Non-Farm Payrolls on Friday.
The BoE monetary policy update will coincide with the release of the quarterly Monetary Policy report which will likely shed some much-needed clarity as to whether a 2022 interest rate rise will happen. Markets are expecting the bank to announce no significant changes, but they will adjust their forecasts and give guidance of its Quantitative easing programme.
Any headlines around trimming the Quantitative easing programme or a larger then expected increase in inflation projections could give GBP a boost.
EURUSD prices failed to cheer the better than forecast German retail sales for July and US ISM Manufacturing PMI that dropped below market forecasts 59.5 vs 60.9. Although it’s worth noting that the latest activity number from China also disappointed markets and raised concerns over the global economic recovery from the pandemic.
Have a good day.
Joseph Sidders, Relationship Manager.
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