Foreign Exchange Daily Market Update 04/08/2016

Thu, August 04, 2016

Volatility Gauge Rises Before BOE Rate Decision

A measure of overnight possible price swings for the Pound against the dollar approached the highest closing level since Britain voted to exit EU in June as traders prepared themselves for the BOE’s policy decision this afternoon, which most economists predict will bring the first interest-rate cut in seven years.

Sterling declined against all of its 16 major peers as swaps pricing showed a 100% chance of a rate cut.

Sterling erased some of Tuesday’s gain against the Dollar, which was the biggest in three weeks, after a report showed U.K. services fell at the fastest pace in seven years. That added to the thought the BOE will ease policy to head off an economic slowdown.

The Pound has been the biggest loser against the Dollar among major currencies since Britain voted to leave EU. Sterling has fallen almost 11% against the Dollar since the referendum.

Sterling fell 0.3% to 1.3287 against the Dollar as of 7:41 a.m. It dropped to a 31-year low of 1.2798 on July 6. The Pound declined 0.2% to 1.1926 against the Euro.

Data to look out for today.

12:00: GBP BOE Rate Decision

12:00: GBP BOE Asset Purchase Target

12:00: GBP BOE Inflation Report

CURRENCY PAYMENTS MADE SIMPLE

PRESS RELEASE

BOE cuts interest rates by 0.25% for the first time since March 2009. The vote was imminent at 9-0. BOE have expanded QE by 60 billion to buy corporate bonds.

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