BoE meeting poses event risk to GBP
In general news, yesterday saw oil slip well below $100 per barrel, as OPEC+ announced a 100k barrels per day increase in production, and a report showed US oil inventories unexpectedly surged higher last week. This, amid some hawkish rhetoric from the Fed over the past 48hrs saw the dollar remain in the ascendancy for much of yesterday. A much better than anticipated non-manufacturing ISM survey in July also coincided with a firmer tone to the dollar. The headline figures jumped to 56.7 (forecast was for a fall to 53.5), while the new orders component surged to 59.9.
Overnight though, the dollar was unable to hold onto all of its gains. EUR/USD opens this morning in the top half of $1.01-1.02, having traded as low as $1.012 yesterday, GBP/USD is changing hands around the midpoint of $1.21-1.22 and USD/JPY is trading up above ¥134. Elsewhere, EUR/GBP remains at the halfway mark of the 83-84p range.
As we look ahead to today, the main event will be the Bank of England meeting. The BoE is widely expected to raise rates for the 6th consecutive meeting, although there is some debate as to whether the committee will opt for a 25 or 50bps hike. Market pricing is currently in favour of a 50bps increase, so there could be some fallout should the decision be 25bps. The Monetary Policy Report and the press conference will also garner close scrutiny, as the BoE has been downbeat on the UK economy’s prospects in 2022-23. The meeting poses risk for sterling – if you have any GBP requirement, get in contact today.