Yesterday, the Pound managed to break out of recent trading ranges against the Euro and US Dollar. The GBP/USD exchange rate managed to achieve it’s highest levels in around three weeks, marking its biggest one-day gain since February.
Pound Exchange Rate: BoE Interest Rate Decision in Focus
The British currency has been climbing higher on Brexit optimism and speculation that the Bank of England (BoE) may need to make an upward adjustment to interest rates in the near future if inflationary pressures keep increasing.
The Bank of England’s monetary policy meeting tomorrow will be in the crosshairs and could be a large influence on Pound Sterling exchange rate movement. However, this morning showed UK manufacturing dipped in April from 55.1 to 53.1. Recent months had shown rapid expansion in the manufacturing sector as businesses stockpiled and prepared for Brexit. However, since the Article 50 extension and the prospect of a no-deal Brexit delayed for a few more months, manufacturing has cooled.
Euro Climbs, Trump Interferes with Federal Reserve Monetary Policy
The Euro has also been able to claw back some losses against the US Dollar in the past few sessions, with better-than-forecast economic data from the currency bloc coming to the fore. Markets will be looking to the Eurozone inflation reading due out on Friday for further direction.
Meanwhile, in the US, President Donald Trump has been getting involved in the Federal Reserve’s monetary policy once again, threatening to discredit the central bank’s autonomy. Trump has criticised the central bank plenty since he hired Chief Jerome Powell, arguing that the bank’s handling of monetary policy isn’t adequate. Trump’s now directly called for rapid rate cuts in order to give the economy a boost, while also suggesting quantitative easing. This kind of interference will be a cause for concern among markets, which will be keeping a close eye on any further developments.
The Pound US Dollar (GBP/USD) exchange rate is trading at levels of 1.3064. The Pound Euro (GBP/EUR) exchange rate is trading at 1.1627.