Pound Falls to 2.5-Year Lows, Ignores BoE and Rallies on USD Weakness

The British pound today fell to 2.5-year lows against the much stronger US dollar, which was boosted by yesterday’s FOMC rate decision. The GBP/USD currency pair was barely affected by the Bank of England‘s interest rate decision before rallying higher later driven by the weak greenback.
The GBP/USD currency pair today fell to a low of 1.2081, a level last witnessed in January 2017 before rallying to a high of 1.2170 and was trading near these highs at the time of writing.
The currency pair fell earlier today driven largely by the greenback’s strength as tracked by the US Dollar Index, which hit a 2-year high of 98.93 before falling in the American session. The pair attempted to rally following the release of the Markit/CIPS UK manufacturing PMI, which beat expectations by 0.3 but remained in contraction territory having come in at 48.0. The pair ignored the BoE’s monetary policy decision, which maintained the status quo and promised to hike rates in future. The central bank’s Monetary Policy Committee expressed optimism in the British economy despite the pending Brexit deadline. The BoE Governor, Mark Carney‘s speech confirmed the bank’s optimism regarding the UK economy despite the imminent risks.
The cable recouped all of its losses during the American session after the release of weak US manufacturing data. The pair fell slightly following the imposition of additional tariffs on Chinese exports by President Donald Trump.
The currency pair’s future performance is likely to be affected by tomorrow’s UK construction PMI and US non-farm payrolls data.
The GBP/USD currency pair was trading at 1.2149 as at 19:21 GMT having recovered from a low of 1.2081. The GBP/JPY currency pair was trading at 130.47 having dropped from a high of 132.55.

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