pound receeding

Pound Muted ahead of Bank of England Rate Decision

Pound News: Sterling Subdued as UK Services PMI Contraction Confirmed

Today’s UK services PMI report from Markit showed a surprise upward revision, but still confirmed the service sector contracted sharply during January’s lockdown.

As the contraction was largely priced in, the Pound traded in a narrow range ahead of the Bank of England’s (BoE) upcoming policy decision.

The BoE will be holding its February policy decision during Thursday’s European session. If the bank takes a more dovish than expected outlook on coronavirus uncertainty, the Pound could shed some of its recent gains.

Euro News: Eurozone PMIs Beat Forecasts but Uncertainty Dominates

While today’s Eurozone services and composite PMIs slightly beat forecasts and inflation turned positive for the first time after five months of deflation, concerns over the Eurozone’s coronavirus outlook outweighed any optimism over the data.

The Eurozone is still struggling with its coronavirus vaccine rollout, which is weighing on the Euro outlook.

One of the week’s most influential datasets, Eurozone retail sales results, will be published tomorrow, where stronger Eurozone retail data could offset some of the Euro’s recent weakness.

US Dollar News: USD’s Recovery Rally Continues

Investors continue to find the US Dollar appealing this week. As the strength of rivals like the Pound and Euro soften, the US Dollar is seeing an impressive rebound from its recent lows over the past week.

The US ISM non-manufacturing PMI hit a two-year high this afternoon and could drive the US Dollar this evening into tomorrow, while US Dollar investors await Friday’s anticipated US Non-Farm Payroll Report.

Canadian Dollar News: Strong Oil Prices and Market Sentiment Keep CAD Strong

The Canadian Dollar has registered solid gains against the Pound this week, and held most of those gains today. The Canadian Dollar is largely appealing due to strength in prices of oil, Canada’s biggest export, as well as global recovery optimism.

No notable Canadian data is due for publication tomorrow. Instead, the Canadian Dollar will be driven by market sentiment until Friday’s Canadian job market report is published.

Australian Dollar News: ‘Aussie’ Remains Weak since RBA Decision

While market sentiment has improved since earlier in the week, investors are still hesitant to return to the Australian Dollar. The ‘Aussie’ has been less appealing since the Reserve Bank of Australia (RBA) ramped up its quantitative easing (QE) on Tuesday.

Australia’s December trade balance report will be published during Thursday’s Asian session. This and potential shifts in risk-sentiment are most likely to influence Australian Dollar movement in the coming sessions.

Upcoming Data

Thursday, 4th February

00:30    Australian Trade Balance

10:00    Eurozone Retail Sales

12:00    Bank of England (BoE) Policy Decision

13:30    US Jobless Claims

15:00    US Factory Orders