GBP/USD retreats to 1.2850 area after BoE Governor Bailey’s comments

0
  • GBP/USD tested 1.2900 in American session but lost its traction.
  • BoE Governor Bailey says BoE is “not out of ammunition” on QE.
  • US Dollar Index stays in negative territory below 94.

The GBP/USD pair spiked to a daily high of 1.2903 in the early American session but reversed its direction and erased a large portion of its daily gains. As of writing, the pair was still up 0.2% on the day at 1.2853.

While speaking at an online event organized by Queen’s University Belfast, Bank of England (BoE) Governor Andrew Bailey said that the BoE was “not out of ammunition” with regards to additional quantitative easing. Commenting on the possible use of negative rates, “we do not rule out using negative interest rates but are realistic about challenges from banking retail deposits.” Bailey said. 

Although Bailey’s remarks on the policy outlook were nothing new or surprising, the British pound struggled to find demand and started to weaken against its major rivals. At the moment, the EUR/GBP pair is up 0.5% on the day at 0.9130.

DXY stays below 94 ahead of presidential debate

On the other hand, the greenback remains on the back foot and helps GBP/USD stay in the positive territory for the time being. The US Dollar Index (DXY) is currently down 0.4% on the day at 93.90. 

However, Wall Street’s main indexes are staying in the red ahead of the first presidential debate, suggesting that the USD could show some resilience if the market mood remains cautious.

Earlier in the day, the data from the US showed that the trade deficit in August widened to a record high of $82.94 billion but had little to no impact on the DXY’s movements.

Technical levels to watch for

Get the 5 most predictable currency pairs

About Author

Comments are closed.