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GBP/USD defies gravity ahead of BOE

The British pound looks quite perky ahead of the Bank of England’s “Super Thursday”. Cable has topped 1.27, getting closer to the initial post-Brexit low of 1.2790 seen in June 2016.

Sterling is enjoying the weakness of the US dollar following Trump’s actions and inactions. The US president is focused on fighting trade partners rather than providing the market-desired fiscal stimulus.

So, this explains the dollar side of the equation. But what about the other side of the pond? Data coming out of the UK has been mixed. Yesterday’s manufacturing PMI beat expectations but the most recent data was supposed to dampen the rally.

UK construction PMI dropped and missed expectations. Economists had expected Markit’s measure to hit 53.9 points, but the actual result was only 52.2,  two points below the 54.2 figure seen  back in December. The most important purchasing managers’ index is published tomorrow, for the services sector.

Yet the big event of the  week comes today. The Bank of England publishes its rate decision, the meeting minutes from this decision and the Quarterly Inflation Report. This is dubbed “Super Thursday”. In its previous assessment of the economy, the BOE shifted from a dovish stance to a neutral one, saying rates could go either way. This was a big change from August’s rate cut, additional QE and general worries about Brexit.

Ideally, Carney would like to see the pound at higher ground, pushing inflation lower and not having to raise rates in order to battle inflation.

What will the BOE do? More about GBP/USD: Brexit hurts more than Trump [Video]

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.