GBP/USD Holds Steady Ahead of Bank of England’s Decision Today
The Pound US Dollar (GBP/USD) exchange rate is holding steady ahead of the Bank of England’s (BoE) interest rate decision later today. Investors are poised to act on the bank’s forward guidance.
At the time of writing, the GBP/USD exchange rate is trading around $1.3954, barely unchanged from today’s opening rate.
Pound Looking to BoE Interest Rate Decision for Potential Boost
Investors are holding out for the Bank of England’s (BoE) interest rate decision later in today’s session before making any bullish moves. While the “Old Lady” is unlikely to amend its interest rates, the bank’s statement could give insight into the direction of the economy.
Inflation risks mount as the cost of fuel, clothing, recreational goods and meals out climbs with Britain’s return to (‘the new’) normal. Some analysts believe this could bring forward the introduction of monetary policy measures, as the BoE has proven itself not averse to speeding things along in the past. Berenburg’s senior Economist Kallum Pickering sees an even chance that the bank may revise its asset purchasing deadline from December to August, remarking that ‘So far during 2021, the BoE has consistently surprised markets.’
Hawkish comments from BoE policymakers have also encouraged Sterling optimism, as initial tapering discussions back in May could gain traction given recent inflation data.
Should the BoE strike a positive tone, ‘Cable’ bulls are likely to drive the pairing upwards. Caution may be exercised, however, if Covid fears take precedence, with Brexit negotiations weighing equally on the Pound.
US Durable Goods Orders a Possible Impetus for USD Movement?
As US Dollar (USD) traders remain sceptical over recent the recent rate hike and tapering uncertainty, the publication of US Durable Goods Orders presents an opportunity for USD exchange rates to rally.
With Durable Goods Orders predicted to have risen by 2.8%, today’s data release could be the catalyst USD investors need to restore confidence after the currency fell to a weekly low against the Pound yesterday. In monthly terms, the ‘Buck’ has seen upwards movement, striking an optimistic note: although the currency’s downward trajectory over this past year reflects an overall slump. Analysts hope that increasing Goods Orders this month will lead to sustained growth into next year, with orders projected to trend around 0.30 percent in 2022.
Other releases to watch out for include the US GDP Price Index and Jobless Claims figures, with positive outcomes predicted for both. GDP is expected to rise by 6.4%, signalling economic growth, while falling jobless claims would indicate healthy hiring practices, demonstrating that businesses are seeing sustained demand.
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