Though most policy experts see the Bank of England as pushing ahead with a rate hike at the upcoming policy meeting, of greater concern is the potential for the inclusion of a more dovish follow-up statement. That concern has effectively limited yesterday's rally and had earlier pushed the Pound Sterling to a 1-week trough. Analysts say that the 25 basis points rate increase has already been priced in but they are anticipating a sell off in Sterling if dovish commentary ensues from the Bank of England Governor or any of the members of the Monetary Policy Committee.
As reported at 11:10 am (BST) in London, the GBP/USD was trading at $1.3121, up 0.02% and moving away from the earlier low of $1.3096 while the high for the session was recorded at $1.3127. The EUR/GBP is trading at 0.89037 Pence, down 0.04% and near the lower end of today's trading range of 0.89027 Pence and 0.89172 Pence.
Fresh Concerns for Chinese Tariffs
In Asia, the AUD/USD was trading lower at $0.7415, down 0.1854% while the NZD/USD was trading at $0.6803, down 0.2177%. The rise in risk aversion is due to the fear of an escalation of US President Trump's “trade war” with China. The latest media reports suggest that Trump will be proposing an additional $200 billion in Chinese import tariffs, at 25%, that is a significant increase from the 10% initially proposed. As major trading partners with China which has seen its manufacturing sector slowing yet again, that has negatively impacted the Aussie and Kiwi Dollars.