Pound Sterling ALERT: GBP Falls after BoE?s ?Super Thursday?

November 5, 2015 - Written by Tim Boyer

STORY LINK Pound Sterling ALERT: GBP Falls after BoE?s ?Super Thursday?

GBP-EUR Hits Multi-Month Best Conversion Rate after Services PMI

With the week’s UK Services and Manufacturing PMIs exceeding forecasts, the Pound (GBP) enjoyed a bullish run until Thursday, romping to a multi-month high against the Euro (EUR) and holding its own against the US Dollar (USD).

BoE Growth & Inflation Adjustments Send Pound Sterling Trending Lower

However, Sterling’s fortunes took a decided turn for the worst on Thursday after the Bank of England’s (BoE) ‘Super Thursday’ trio of announcements. For the second time this year, the BoE’s interest rate decision coincided with the immediate publication of minutes from the policy gathering and the central bank’s quarterly inflation report. Given recent releases it had been hoped that the central bank would adopt a comparatively hawkish tone on the subject of when borrowing costs might be likely to rise.

Forecasts for 2015 Rate Adjustment Dashed by BoE Reports

However, investors were disappointed by the decidedly dovish slant to both the meeting minutes and the inflation report, resulting in a broad-based Sterling sell-off. The British currency tumbled across the board, posting a particularly dramatic decline against the Euro.
With the central bank cutting both its growth and inflation forecasts, the prospect of interest rates being increased around the turn of the year took a bit of a battering, and so did demand for the Pound.

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped from a high of 1.4199 to a low of 1.3979 before returning to trend above the 1.40 level before the close of the European session

Governor Mark Carney, who had previously said a decision on whether to raise rates would come into sharper focus around the end of this year, was vaguer this time, saying simply that the BoE would move when the time was right. Sterling fell sharply after the BoE's announcement, which surprised investors who had expected a clearer signal that a rate hike was approaching and contrasted it with the tone of the US Federal Reserve. Its chair Janet Yellen said on Wednesday that a US rate rise was a prospect for December […] Carney, asked by a reporter if he regretted saying a rate decision would become clearer around the turn of the year, said: "Absolutely not."’

GBP Exchange Rate Predictions: UK Production Data Forecast to Impact Pound Trading

Before the weekend further Pound Sterling exchange rate movement could be caused by the publication of the UK’s Manufacturing and Industrial Production reports. Industrial output is set to fall by -0.1% on the month while manufacturing production is believed to have risen by 0.6%. The UK is also set to publish its trade balance number, with a narrowing in the deficit having the potential to lend the Sterling support.

The US Non-Farm Payrolls report is also likely to be a major cause of currency market movement on Friday.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Dollar Pound Forecasts Euro Forecasts Pound Forecasts