Cautious BoE Turns Sterling Soft
The near-term outlook for Pound Sterling seems to have softened as markets react to the Bank of England’s signal that expectations of further interest rate hikes may not come as soon as expected.
The Bank’s Monetary Policy Committee (MPC) on Thursday, voted 8-1 to hike rates by 25 basis points but at the same time issued a cautious set of guidance regarding the need for further interest rate rises.
The UK currency was sold against all its major peers in response to an apparent mismatch between what the market was looking for and what the Bank actually intends to deliver.
In level terms, a softer tone in sterling sees the GBP/EUR open under the 1.19 mark with Cable (GBP/USD) trading at the midpoint of 1.3150. After the recent push higher in the euro, the common currency dips slightly to end the week which sees the EUR/USD open circa 1.1075 as we begin Friday’s trading session.
Datawise, nothing of significance on the docket today. One eye should be kept on developments in Ukraine with weekend positioning also being key as we head into the European close in the afternoon.