BoE Capping Sterling Gains
The Pound to Euro rate initially fell at the start of the week but picked up traction mid way through and may further pick up more strength if weekend reports of an atrocity in Ukraine lead European capitals to contemplate a Russian gas boycott, given its possible implications for the Euro.
Sterling’s initial fall came after Bank of England Governor Andrew Bailey called into question the market’s assumptions about the outlook for Bank Rate, with an overambitious stance being taken as the single currency staged a recovery of its own on rumours of a potential peace agreement.
As trading gets underway this morning, EUR/USD is near to the midpoint of the 1.10-1.11 band whilst the GBP/EUR starts the week higher circa 1.1885. Elsewhere, Cable (GBP/USD) is changing hands around the 1.31, representing a modest fall from where it opened the previous Monday.
Datawise and looking ahead to this week, the Fed meeting minutes are due and will be carefully assessed as the market looks for the strength of opinion within the FOMC for hiking in 50bps increments. Otherwise, a fairly quiet day on the macro front.