The pound stuck to a narrow range vs. the US dollar yesterday, trading just above 1.31 for most of the day. UK Manufacturing PMI printed more or less in line with expectations and US data was mixed. Investors have also been reluctant to do much ahead of today’s much anticipated Bank of England monetary policy announcement.
The Bank of England was widely expected to raise interest rates from 0.5% to 0.75%, which was not fully priced in, Bank Governor Carney spoke following the announcement. Carney's comments added continued pressure on the pound, which nearly saw a break down through 1.30.
The bank also publishes its Inflation Report in which we’ll get details on forecasts for short, medium and long-term inflation. In the last report, the BoE saw inflation at 2.35% in 2-3 years, based on unchanged monetary policy. Meanwhile, there are fewer data releases due out from the US today, but traders will have half an eye on tomorrow’s Non-Farm Payrolls.