British Pound Falls Ahead of Next Week???s Bank of England Rate Decision
The British pound was the worse performing currency today, having fallen over 1 percent against the US dollar and Japanese Yen.
The pace of growth in the manufacturing sector slowed in the month of January which is part of the reason why the pound weakened but the other reason is because the Bank of England will be announcing an interest rate decision next week and the market expects them to lower rates by 25bp. Next to the US Federal Reserve, they are expected to be the central bank that lowers interest rates most aggressively. The economy has been on a downward spiral, led by a rapid deterioration in the housing market. In addition to the BoE decision, we are also expecting construction sector PMI, service sector PMI and industrial production. We expect most of these numbers to be pound bearish, taking the currency pair back down to 1.95.