The pound came under pressure following this morning’s publication of key UK economic data, although the losses were limited as Mark Carney, the Bank of England Governor, reiterated that an interest rate rise was on the horizon.
Once the FOMC meeting and press conference are both out of the way, the near-term direction for the dollar should become clearer. For those who prefer to focus on something else, crude oil or a non-dollar FX pair would be a good place to start.
Sterling held above 1.32 against the dollar early Thursday as traders eagerly await the Bank of England's policy meeting today. Bond yields declined from July highs but remained elevated, as some market participants believe that the BoE may surprise, with a 25-basis point rate hike.
Financial markets are set to open on a more downbeat note on Friday, with earnings from Amazon on Thursday being blamed for the initial underperformance along with the U.S. Senate’s inability to pass the “skinny repeal” of Obamacare.
It should be an interesting day for markets on Wednesday, with the UK releasing data on second quarter growth this morning, the US Federal Reserve announcing its latest decision this evening and crude inventory data being released after API reported a substantial reduction.
Asian shares were mostly mixed during early trading on Wednesday, while the Greenback held steady ahead of the Federal Reserve decision later today which is largely expected to conclude with monetary policy unchanged.
A sense of caution seems to be the theme for the financial markets as trading gets underway for the week, with investors braced and preparing for an incredibly busy week packed with both crucial economic reports and major risk events.