Sterling Dips As BoE Leaves Rates Unchanged
Sterling dropped fairly significantly against its major peers yesterday after the Bank of England offered no positive news regarding interest rates, whilst this was not unexpected the Pound still weakened. The Bank actually sounded fairly upbeat on the outlook for the UK economy but would prefer to keep its powder dry until the effects and spread of the third wave is fully known. Rates were left unchanged at 0.10% as expected and they stated that they will continue to monitor the situation carefully and are expected to be more active at the August meeting, which could give GBP a boost.
In level terms, the slightly firmer tone to the Euro over the past 24 hours sees EUR/USD start today around the 1.1945. Meanwhile, GBP/EUR is tailing off slightly and begins Friday trading at the 1.1650 mark with GBP/USD continuing to operate in a 1.3890 -1.40 corridor.
Today, the main data focus point in a rather quiet day is the US personal consumption data. The forecast is for a 0.4% rise in consumption, despite a 2.5% fall in income. A 3.4% rise is expected in regards to Core-PCE inflation under continued price pressures in the US. Unless any major surprises occur, the data may not impact the dollar very heavily.