Cautious optimism keeps pound rising on BoE ‘Super Thursday’

There’s a lot at stake from today’s Bank of England (BoE) ‘Super Thursday’, with questions about the outlook of new policymakers, quantitative easing, inflation and, of course, how the committee will vote on interest rates.

Political turmoil in the US pushed the pound higher yesterday, even after the UK construction PMI disappointed.

GBP/EUR is holding opening levels today at €1.1164, as is GBP/USD at US$1.3235. GBP/AUD has climbed 0.4% to AU$1.6696, while GBP/NZD is up 0.2% to NZ$1.7883. GBP/CAD is 0.3% higher after rising to CA$1.6676.

It’s Bank of England (BoE) ‘Super Thursday’! Find out why that’s so very important below…

What’s been happening?

The latest UK construction data may have shown that growth in the sector slowed to an 11-month low during July, but the pound was largely making solid gains yesterday.

There is concern that the construction sector might be in for a weak patch, due to the combination of rising material costs and weaker demand for orders.

July was the first month in which the volume of new business declined since August 2016.

However, construction is a small contributor to the UK economy, so the figures weren’t too concerning.

Additionally, the pound was able to rise thanks to political concerns in the US, after it was claimed that President Donald Trump could have obstructed the course of justice over his son Donald Jr’s meeting with a Russian lawyer last year.

President Trump helped Trump Jr to write a statement dismissing the significance of his meeting with Natalia Veselnitskaya, even though it later turned out Trump Jr met her after being offered incriminating information on presidential candidate Hillary Clinton.

This caused investors to flee the US dollar as political volatility in the States continues to roil on, allowed GBP/USD to climb.

The pound also climbed against most of the majors, as sterling is something of a safe-asset in times of uncertainty.

GBP/EUR was unable to capitalise, however, as the weakness in the US dollar boosted the euro to a greater extent.

What's coming up?

It’s Bank of England (BoE) ‘Super Thursday’ today. This means, as well as hearing the latest monetary policy decisions and reading the minutes of the meeting, we also get to see the latest Inflation Report.

There are so many questions surrounding this ‘Super Thursday’; how many policymakers will back a hike? Will Silvana Tenreyro side with Carney in her first meeting, or break ranks to join the hawks? Will McCafferty force a discussion on quantitative easing and, if so, will others agree that it may need an early exit?

With the release of the key UK services PMI alsodue for release today, enormous volatility is surely the order of the day for the pound.

The Euorpean Central Bank (ECB) Economic Bulletin and Eurozone retail sales figures will be released today, as well as the US ISM services/non-manufacturing composite index.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.