Sterling still has very few friends | Smart Daily Currency Note
GBP/USD – 1.5668
Sterling struggled badly yesterday amid speculation that the Bank of England will cut its growth forecasts in today’s Inflation Report. For the first time in 6 months the pound fell below the 1.56 mark against the dollar, and broke through 1.16 in the morning against the euro. The Bank of England is expected to say that inflation looks likely to remain above target for the foreseeable future, which hardly bodes well for a tightening of monetary policy, as a result, sterling could very well stay at least as weak as it is currently. Yesterday the Consumer Price Index data came out as expected with a 2.7% increase for the fourth consecutive month in January – inflation has remained at this high level now for the longest period since records began. Markets were little changed by the release and were more focused on speculations around today’s important press conference held by Bank of England Governor upon the release of the Inflation Report. Volatility is often experienced during these speeches as observers try to solve the subtle indications regarding future monetary policy and the BOE’s future interest rate decisions. Call in now for the latest news and rates.
The US dollar struggled yesterday, weakening off against the vast majority of its major counterparts; but, did reach a 6 month high against sterling of 1.557 before falling back in the afternoon. The US dollar struggled following comments from the Federal banks Vice-Chairwoman who said that the central bank will use “forceful action to increase the pace of economic growth and job creation.” President Obama was speaking late last night and it will be interesting to see how the markets react following his comments today; however, it is likely that the Treasury secretary’s speech at 3pm today will cause a lot more volatility as his speech looks to communicate the US President’s economic policies. There is also a raft of data out of the US today including retail sales figures, crude oil inventories and a benchmark 10-year bond auction. Call in now for the latest update and a live price from the market.
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