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Sterling Gains But Cautious Ahead of BoE Meeting

Sterling Gains But Cautious Ahead of BoE Meeting

Improving sentiment around global markets have seen the Pound to Euro exchange rate rally back above the 1.20 mark in anticipation of a February interest rate hike by the Bank of England. Market analysts have however warned, a cautious undertone may be taken by the central bank next week.

The Pound had previously suffered deep losses against the Euro and Dollar at the start of the week amidst a sizable selloff in global equity markets but come Friday trading, volatility has eased and investors are again rediscovering their composure.

In level terms, the firmer dollar tone is evidenced by EUR/USD opening in the bottom half of 1.1150, its lowest level since the first half of 2020. GBP/USD is trading back below 1.34 whilst GBP/EUR is operating just above the 1.20 mark. 

Ahead today, the first reading of German GDP is set to show the economy contracted in Q4 whilst elsewhere in the Eurozone, the ECB sentiment indices are forecast to decline in January. A busy data schedule across the pond in the US where core-PCE inflation, income, consumption and employment cost data ( a measure of wage inflations) are due for December.

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