ExchangeRates.org.uk – The Pound (GBP) plunged against most of its counterparts on Thursday, shedding over 1% against the Euro (EUR) and the (USD), following remarks from Bank of England Governor Andrew Bailey that significantly dampened investor enthusiasm. Discussing the trajectory of UK monetary policy, indicated that the BoE might need to adopt a more ‘activist’ stance on future cuts. Previously, the BoE had taken a less aggressive approach to monetary policy compared to its American and European peers. However, following Bailey’s comments, money markets were pricing in an 88% probability of a rate cut at the central bank’s upcoming meeting in November. This put substantial pressure on GBP exchange rates in the wake of the Governor’s remarks, with the risk-sensitive currency further weakened by a prevailing risk-off sentiment. The Euro managed to firm against the majority of its peers on Thursday as it was supported by the publication of some forecast beating PMI data. The latest index confirmed that the Eurozone’s services sector remained firmly within the expansion zone this month (a reading above 50), with the index only dropping from 52.9 to 51.4 rather than a lower expectation of 50.5.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: ‘At first glance, the services sector in the eurozone seems to be holding up fairly well. It’s still growing, and the slowdown is not too steep just yet.’
This, alongside a decisive risk-off market mood, was able to offer the safe-have common currency some modest support during Thursdays European session.
Forecast: Central Bank Speeches in the Spotlight?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate looking ahead to Friday will likely be speeches from both the Bank of England and the (ECB) amid a lack of any further economic drivers. Looking at the Pound, a scarcity of UK data releases may leave GBP exchange rates susceptible to movements based on an upcoming speech from . If Pill’s remarks align with those made by Governor Bailey on Thursday, Sterling could continue to struggle and potentially end the week slipping against its counterparts. Turning to the Euro, a speech from ECB official Luis de Guindos could also undermine the single currency should he also pedal the ECB’s recently dovish narrative.
This content was originally published on ExchangeRates.org.uk
