Bank of England stays steady, now eyes shift to the US
Friday 7 August, 2020
Daily Currency UpdateGBP - British PoundYesterday morning, as expected, the Bank of England kept rates unchanged at 0.1% and its asset purchase programme at £745bn. Looking at these two figures surely this is dovish news for the pound, however diving down deeper into the Bank of England statement they are in fact more optimistic about the UK economy than many other forecasters and indeed their own projections from May. According to the central bank the UK is expected to shrink by 9.5% this year before bouncing back 9% next year. All in all this improved outlook put the wind in the sails for the pound although it didn't quite break those March 2020 highs.Bank of England governor Andrew Bailey then spoke later on in the morning, keeping everyone on their toes as he was due to speak after lunch, but fortunately in his interview he reiterated to the market extensively that the Bank is not looking at negative interest rates. This was fortunate as we anticipated this as a risk for sterling and goes to show that even the most scheduled announcements can sometimes come out earlier than expected!
Key MoversNow the market is focused on the US Dollar due to two major risks that are present. Firstly, today is the deadline for the Republicans and Democrats for any new stimulus package to be passed and the market isn't currently optimistic with European equities in particular selling off yesterday. The second big risk is this afternoon's Non-Farm jobs report which is set to come in around 1.5m against a previous figure of 4.8m. Wherever the jobs figure lands it will tell the market a lot of the US recovery or lack thereof.
- GBP/USD: 1.3100 - 1.3200 ▲
- GBP/EUR: 1.1040 - 1.1130 ▲
- GBP/AUD: 1.8150 - 1.8350 ▲
- GBP/NZD: 1.9640 - 1.9840 ▲
- GBP/CAD: 1.7460 - 1.7530 ▲