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Weekly roundup: Pound tumbles on dovish BoE Forward Guidance

currency-newsWeekly roundup: Pound tumbles on dovish BoE Forward Guidance
The pound got off to a robust start last week, with the currency rallying against most of its peers as a result of some hawkish speculation ahead of the Bank of England’s latest policy meeting.

Aiding Sterling’s advance through the first half of the week were some optimistic comments from Boris Johnson, who expressed confidence that the 19 July reopening will go ahead.

The upside in the pound then ground to a halt in mid-week trade, as the UK’s latest services PMI printed below expectations.

Thursday then saw Sterling retreat sharply after the BoE concluded its latest policy meeting, as the bank struck a far more dovish tone than expected.

The BoE’s forward guidance didn’t provide any hints as to when tapering discussions may begin, with its policy statement also casting doubts on then chances of the bank hiking interest rates in 2022.

Turning to this week’s session, the key focus for GBP investors is likely to be on domestic coronavirus developments, despite optimism from the UK’s Health Secretary Sajid Javid, traders fear that surging cases of the Delta variant could disrupt the 19 July reopening.

Also of note will be the UK’s latest GDP figures, with Sterling potentially firming if growth in the first quarter is revised higher again.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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