It has been a fairly choppy day for the pound/dollar cross
as data from the UK,
US and Euro-zone all had an impact on exchange rates. Over the course of the
day cable increased by 0.5% from $1.5644 to reach a week and a half high of
$1.5722 before slipping back to $1.5665 at the time of writing. With all eyes
focused on Thursdays Bank of England
meeting and their interest rate and quantitative easing decision the volatility
is sure to continue.
With the UK
economy struggling to grow there have been calls for the BoE to add to the £325
billion they have already pumped into the system. Today’s data in the UK will have added to those calls as UK
manufacturing continued to slump. Although the pace of the decline eased
slightly the sector still registered a mark under 50 on the Purchasing Managers
index (PMI) which indicates contraction.
If the Bank of England votes in favour of more stimuli
Thursday could see some major movements in the currency markets. In the past an
announcement of QE has reduced the value of sterling and caused the pound to
fall against a basket of currencies. Thursday decision could have the same
impact which would see the GBP/USD cross fall away from the recent high.
In the US,
the manufacturing sector grew for the month of June but not at the rate that
had been forecast. The Manufacturing PMI released by Markit showed the sector fell
from 54 in May to 52.5 in June and as the manufacturing sector in the U.S makes
up large part of the total Gross Domestic Product it is a good indicator of
conditions in the states.
With so much uncertainty surrounding the markets especially
with the chance of more QE in the UK this week it is vital you know
how to protect yourself from any adverse market movements. So if you are buying
or selling dollars in the next couple of weeks click here to complete the
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