Sterling lower after Bank of England announcement
Friday 5 November, 2021
Daily Currency Update
GBP - British Pound
This whole week has centred on two central bank announcements, and yesterday’s Bank of England rate announcement left much to ponder.
Andrew Bailey and his committee held interest rates, against some expectation of a rate hike of 0.15%, and the nature of the rate hold was also watched closely. 7 of the 9 members voted for a hold, much to the surprise of the market, who expected a closer affair had a hold been announced.
This news sent the pound lower, with it dropping by over 2% versus both the pound and the euro on the news. Not only did the Bank of England hold rates, but expectation of a rate hike in their December and February meetings has also diminished on the news of the 7-2 vote split. It looks as though the central bank may have convinced itself that inflation is indeed still a transitory phenomenon, and that UK data of late hasn't convinced the central bank to start hiking yet.
Key MoversAll eyes are on today's non-farm payrolls figure being released at 12-30pm in the US. Expectations are for a strong reading, at 455k, however recent postings have disappointed the market, to then be revised higher.
Today's reading will likely provide evidence and support or otherwise as to whether the Federal Reserve made the right call this week. They pressed the button on starting their tapering of the asset purchase programme, and a strong posting here will likely support the argument that now is the right time to start tightening monetary policy again. ADP unemployment was weak on Wednesday however, and hence a weak posting today could send the US dollar lower this afternoon.
- GBP/EUR: 1.1610 - 1.1690 ▼
- GBP/USD: 1.3420 - 1.3500 ▼
- GBP/AUD: 1.8200 - 1.8430 ▼
- EUR/USD: 1.1520 - 1.1565 ▼