Sterling steady pending Thursdays Bank of England meeting | Smart Daily Currency Note
GBP/USD – 1.5112
Traders have obviously come to expect poor data from the UK as yesterday’s worse than expected Construction Purchasing Managers’ Index (PMI) data mirrored Friday’s Manufacturing release, but caused next to no reaction in the market. Whilst sterling dipped its toe in the waters below 1.50 once again in early trading, it recovered through the day to a high just above 1.51 against the US dollar, and over 1.16 against the euro. The recovery would indicate that markets see sterling as being undervalued at these low prices, but with Services PMI released this morning, and the Monetary Policy Committee releasing monthly asset purchasing and interest rate figures on Thursday, sterling is certainly not out of the woods yet. With the Governor of the Bank of England speaking tomorrow as well, we can expect the volatility to continue as traders place their bets ahead of Thursday as to whether quantitative easing will be extended or not. Call in now for the latest news and prices.
The US dollar traded on the side-lines yesterday as no important data was released. During the day, two Federal Reserve Governors were speaking on the challenges confronting monetary policy in what has been an unusually weak recovery from a severe recession, moreover, they were talking about the Federal Reserve’s progress on ending the “too-big-to-fail” culture – to ensure taxpayers money is not used to bailout large financial institutions in the future. The market reaction to the stalemate of Fridays meeting has been fairly muted and President Obama has now suggested that he is willing to compromise to end the sequester. Today’s main release will be the monthly Non-Manufacturing PMI, which is currently forecast to show a small decline to 55.0 in February – but still demonstrating clear industry expansion. Call in now to get the latest news from your trader.