Sterling subdued following Bank of England rate decision
Monday 8 November, 2021
Daily Currency Update
GBP - British Pound
Sterling has remained under pressure since the Bank of England unexpectedly left interest rates on hold at a record low of 0.1% last week. Most market participants had forecasted that the central bank would raise rates to 0.25% during the November meeting, however after this didn’t happen the pound was sold quite heavily. GBPUSD dropped below the $1.35 handle and GBPEUR broke below €1.17. Neither pair have recovered to the levels since before the interest rate decision.
Bank of England governor Andrew Bailey is speaking on Monday and Tuesday, so the market will be listening in anticipation for further comments from him. With little top-tier economic data from the UK this week, his comments will give GBP it’s direction this week.
Key MoversUS employment data surprised to the upside on Friday. Nonfarm payrolls increased by 531,000 last month after an upwardly revised 312,000 gain in September. At the same time, the unemployment rate fell to 4.6%. This saw the dollar gain against most major currencies. EURUSD touched a 16-month low at $1.1514 before a slight recovery on Friday. The continued divergence between the European Central Bank and the Federal Reserve has delivered constant pressure to the downside for EURUSD.
- GBP/USD: 1.3450 - 1.3550 ▲
- GBP/EUR: 1.1615 - 1.1680 ▲
- GBP/AUD: 1.8150 - 1.8270 ▲
- EUR/USD: 1.1540 - 1.1605 ▲