The Pound (GBP) struck higher against the majority of its peers on Wednesday as markets become increasingly optimistic ahead of the Bank of England’s (BoE) monetary policy meeting later today.
While economists do not expect the bank to alter interest rates in this afternoon’s meeting, there is speculation that the bank may hint at the possibility of a rate hike in the near future.
Meanwhile the UK will also release its all-important Services PMI this morning, with Sterling likely to rise if the index reveals a jump in service sector activity in July.
The Pound Euro (GBP EUR) exchange rate stumbled in afternoon trade yesterday as the single currency was bolstered by its own central bank speculation.
Markets are becoming increasingly optimistic about the possibility of the European Central Bank’s (ECB) beginning to scale back its stimulus in the near future following a slew of upbeat economic data from the Eurozone this year.
However the ECB’s latest Economic Bulletin put a slight dent in this as it suggested that a ‘very substantial degree of monetary accommodation’ was still needed from the bank and that it stood ready to increase financial stimulus if conditions deteriorated.
Sterling stabilised close to a 10-month high against the US Dollar (USD) on Wednesday over growing doubts that the Federal Reserve will raise interest rates a third time this year.
While the Fed has indicated that it still wishes to hike rates one additional time this year, recent political uncertainty and persistently low inflation has caused market odds of a hike to tumble.
Meanwhile, the ‘Greenback’ may be driven lower later this afternoon as the latest US Non-Manufacturing PMI is forecast to have slid from 57.4 to 57.0 in July.
The Pound Canadian Dollar (GBP CAD) exchange rate climbed to a new four-week high earlier this morning as sliding oil prices and anticipation of a hawkish statement from the BoE drove the pairing around half a cent higher overnight.
Sterling surged over half a cent higher against the Australian Dollar (AUD) in overnight trade on Wednesday as Australia’s Trade Balance figures disappointed investors, with the trade surplus plummeting from AU$2.02bn to AU$0.86bn in June.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate also continued to trend higher overnight on Wednesday as markets remaining concerned over New Zealand’s latest employment data.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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