Pound Drifts Lower Ahead of BoE Meeting

GBP

The British pound drifted lower against rivals ahead of an anticipated Bank of England monetary policy meeting. The chances of an interest rate cut by the Bank of England today to 0.50% from 0.75% exceeded 70% earlier this month due to weakening economic data. However, currently, the probability of an interest rate cut sits at 45% as firmer jobs data, and better-than-expected PMI figures eased investors' concerns over the economic outlook. The GBPUSD dropped to $1.2977, the GBPJPY declined to a three-week low of 141.27, and the EURGBP inched higher towards a one-week high of 0.8487.

USD

The dollar index, which measures the greenback against a basket of major currencies, rose to a two-month high of 98.19 as the US economic outlook seems more robust compared to rivals. The Federal Open Market Committee left the fed funds rate unchanged at a bracket of 1.50-1.75%, while increased interest rates on excess reserves to 1.6% from 1.55% prior. The Federal Reserve Chairman Jerome Powell stated in his presser that he expects inflation to move towards a 2% target, and he believes the current policy is appropriate as long as data is consistent with outlook.

Metals

Gold prices edged higher as investors rushed to safety. The Coronavirus is weighing on risk sentiment, especially as Fed's Powell stated that it could affect the Chinese economy. The price of a gold ounce rose to $1583, the price of a silver ounce rallied to $17.76, while palladium dipped to $2264.

Oil

Oil prices declined as US inventories surged. The US Energy Information Administration reported that the weekly crude oil inventories rose by 3.548 million barrels last week. On the other hand, oil is pressured by the effect of Coronavirus on risk appetite due to its consequences on economic growth. The West Texas Intermediate crude futures declined to $52.30, and Brent futures dropped to $58.66.

Major Economic Events

Disclaimer 

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