Sterling fluctuates expecting BOE meeting this week

Posted 06 February, 2019

The sterling is volatile in the middle of the week. The British currency has been plunging lately facing pressure from better US dollar demand and low economic figures in the UK. Specifically, the latter indicates slower economic growth which probably related to the longlasting divorce process.

As the statistics show, the sterling touched a 2-week bottom vs the greenback near $1.2925, which in fact became the line of the support. As a result, it is rebounding on Wednesday reaching some $1.2962. However, the downward movement is possible especially in light of the upcoming BOE meeting to take place on Thursday. Considering the technical aspect, it seems that the local pressure on the sterling may persist and the currency will have to show that it regain gains above $1.30.

With steadily uncertain Brexit deadline of which is coming, UK Central Bank is likely to be careful and take a waiting mode rather than make broad statements and summaries regarding the economic outlook and monetary policy. However, the market is curious whether slack economic reports, including PMI, affect BOE's outlook or not. In particular, the sterling may keep falling if BOE points out external economic and Brexit risks.

The sterling to US dollar rate needs to survive above 100-day moving average at 1.29, which in fact restrains bears' pressure. At the same time, this situation partly depends on the US dollar demand for which stays strong.

Previous forecast

07 February, 2019 17:56

← Euro-area economic figures fail to promote euro uptrend

The euro rate keeps on steadily declining since the beginning of this week. The euro to US dollar rate is hovering around a two-week bottom of 1.1355 and may even touch the 1.13 handle. The rate downturn accelerated on Thursday driven by a new European Commission outlook. The European Commission downgraded its GDP growth forecast for the Eurozone from 1.9% to 1.3%. Notably, the regulator revised its forecasts for almost all countries in the region with Germany and France affected the most. The euro downtrend is hardly a surprise for the market, especially amid the strong US dollar rate.

Euro-area economic figures fail to promote euro uptrend

Next forecast

05 February, 2019 16:57

US Federal Reserve soft position – right or wrong move? →

Last week was marked by a softer position of the US Federal Reserve towards the monetary policy, which actually supported the stock markets. The US Central Bank changed its strategy dramatically this January against the December meeting. For now, the US Federal Reserve officials stick to somewhat softer policy. In fact, the Central Bank is no longer states about the possible two-fold increase this year. Still, the changes can be made at any time. At the same time, the US Federal Reserve will have no other choice but to resume monetary tightening if the economic situation in the country remains strong.

US Federal Reserve soft position – right or wrong move?
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