RationalFX: The pound’s been holding steady this week as consecutive days of falling Covid cases have given investors hope for the UK economy.
So much so that sterling is now the world’s top performing major currency.
Investors will now turn their attention to the next Bank of England (BoE) policy meeting on August 5th. The banks European and American counterparts, the European Central Bank and the Federal Reserve, look set to keep policy on hold, so any indication the BoE will taper asset purchases earlier should strengthen the pound further.
Finally, the UK will now allow fully vaccinated EU & US visitors into the country without quarantining from Monday. This should provide another boost to the economy in the weeks to come.
Yesterday’s Federal Reserve meeting was, once again, uneventful. Interest rates and monetary policy remained unchanged and as a result the dollar weakened.
The bank’s narrative remained largely the same. Current inflationary pressures are transitory and should subside in the coming months while inflation will be allowed to overshoot the 2% target for the next few months. Many had hoped for discussions around tapering but were left disappointed. Fed Chair Jerome Powell reiterated to the committee the economy had made progress but there was no mention of when assets purchasing may be tapered.
There’s still today’s half of the meeting but investors are already looking towards the Jackson Hole Symposium at the end of August for further guidance.
12:30 – USD – Gross Domestic Product Annualized (Q2) PREL – 8.5% Vs 6.4%
Source : ETFWorld.co.uk