On Thursday, the BoE announced a larger-than-expected asset purchase program, intended to help shore up the UK economy which is still largely impacted by the coronavirus pandemic.
The pound sterling had moved higher against its US rival and neared a 9-week peak after a shift in risk sentiment gave riskier currencies some support. That was largely as a result of the announcement over the weekend that the Democratic contender for US President, Joe Biden, had secured enough electoral votes in the hotly contested campaign. Optimism is growing that President-elect Biden will push through a more substantial stimulus package, soon after he takes the oath of office on January 20th, 2021. Limiting any additional gains for the pound is concern over the Brexit negotiations; both sides are trying to reach some sort of consensus before the December 31st deadline. Both sides believe that a deal can be worked out soon.
In London trading as of 11:23 am, the GBP/USD was trading at $1.3143, down 0.05% and sliding away from the session peak of $1.31995. The EUR/GBP was trading higher at 0.9032 pence, a gain of 0.02%; the pair has ranged from a trough of 0.90063 pence to a peak of 0.90528 pence in today’s trading session.
Focus on BoE and ECB Leadership
The Governor of the Bank of England, as well as his counterpart from the European Central Bank, are due to speak later today; both will likely take the market’s focus as FX traders attempt to gauge the likely course of the central banks. On Thursday, the BoE announced a larger-than-expected asset purchase program, intended to help shore up the UK economy which is still largely impacted by the coronavirus pandemic. Another series of measures intended to minimize the spread is being put in place in the UK even now. Both Andrew Bailey and Christine Lagarde are likely to speak about the impact COVID-19 is having on the respective economies, and indeed worldwide, and may offer some clues as to how the major central bankers plan to combat the ill effects to the economy.