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Bank of England Meeting Tomorrow

Daily Currency Update

GBP - British PoundSterling has remained fairly volatile this week, in the lead up to Thursday’s Bank of England meet, where it is expected the MPC will decide to increase current bond buying power by 100bn. The MPC have already used an array of stimulus policy however options are running low for Bailey and his committee. The UK's IR rate is fixed at 0.1% however rumours have circulated that Bailey may be the first to cut IR into the negative, which certainly wouldn’t do much good for sterling. It is likely that sterling is currently undervalued and anchored to the downside due to the number of key dates in Britain’s upcoming economic calendar and the number of unresolved, moving parts. To make matters worse, the UK hasn’t seen a positive fundamental data release in a while, most recently unemployment data came in over 100k worse than expected. It seems the pound is holding steady around the $1.26 handle and will likely find a more natural equilibrium once the UK-EU Brexit extension has been granted and the BoE decides what’s best for the UK.

Key Movers

It seems the US economy has begun to fight back, as after weeks of record-breaking negative data, fundamental data releases are starting to look slightly more optimistic. Tuesday afternoon saw the monthly core retail sales come in at 12.4%, roughly 7% better than expected and 28% better than last month. With a large portion of the economy still in lockdown and a number of businesses yet to open, this is a positive sign for the world’s largest economy. At the same time however, many are worried about the US ability to contain a second wave of Coronavirus.

Expected Ranges

  • GBP/USD: 1.2490 - 1.2655 ▲
  • GBP/EUR: 1.1100 - 1.1275 ▲
  • GBP/CAD: 1.6915 - 1.7185 ▲