After Friday's positive jobs reading helped boost the dollar further against the pound, Sterling managed to claw back a bit of ground over the course of today. During Asian trade GBP/USD fell as low as $1.4491 but recovered to $1.4597 during the London session to lift some of the weight off the pounds shoulders.
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GBP/USD graph.
Not much to write home about!
2016 has not been kind to the pound and it is difficult to see things improving anytime soon. I know we are only eleven days in but the pound is currently one of worst performing currencies of the year.... Not exactly what everyone had been expecting!
With China rocking the boat again and the Federal Reserve increasing their benchmark rate, there is a grey cloud starting to form over the UK which shows no sign of disappearing. It could also get worse on Thursday when the Bank of England release their latest interest rate decision.
I don't think anyone is expecting the UK's central bank to raise interest rates this week so I doubt we will see any positive moves on the back of the announcement. However, we could see some movement on the back of BOE's minutes from the meeting which are released shortly after the rate decision.
The minutes will give us an insight to how the nine MPC members voted and if there is any change we could see some volatility in the market. For the past few months one member of the MPC has been voting to hike rates but if that changes and all nine members vote in favour to keep rates on hold we could easily see the pound weaken.
How far the pound will fall is anyone's guess but a change in mentality from the Bank of England would not send a positive message and I wouldn't be surprised if GBP/USD fell below $1.44.
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