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The GBP/USD cross was trading around $1.22 when markets opened in London, but since then the pound has been steadily edging lower against its U.S. counterpart as you can see from the graph below.
GBP/USD graph
Why is the pound falling today?
With talk of the UK's exit from the European Union still weighing heavily on Sterling, markets were thrown another curve ball over the weekend with several media outlets announcing that Bank of England Governor Mark Carney could bring an end to his tenure in 2018.
Despite other newspapers contradicting these theories and saying he will stay on for his full eight year term, investors have been left in limbo and will now be looking towards the Bank of England's meeting on Thursday for some clues.
What could impact GBP/USD this week?
As I mentioned above, the Bank of England will meet on Thursday for what it dubbed "Super Thursday". Along with their interest rate decision, meeting minutes, asset purchase facility and interest rate votes, the central bank will also deliver their quarterly inflation figures.
With the UK inflation figure rising quickly due to a weaker pound and the cost of imports, we could see some changes made to the Bank of England's inflation target. Mr Carney could also announce an interest rate hike is on the horizon to combat the rising inflation figure.
The meeting has the potential to move the GBP/USD cross in either direction, depending on how traders and investors view the banks actions or comments.
Come Thursday afternoon we could easily see the pound trading under $1.20 against the dollar if the comments are seen as negative, while a positive outcome could push the currency pair back towards $1.23.
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