An unexpected interest rate cut by the Fed has FX traders pondering whether or not the Bank of England might act similarly. Those concerns sent the Pound Sterling lower against both the Euro and the greenback. Though the Fed's move did little to assuage market concerns that it could shield the US economy from the repercussions of the Coronavirus fallout, market players are betting that the next meeting of the BoE is likely to result in a similar 25 basis points reduction. The BoE next meets on March 26th. In the interim, data is likely to drive the Pound, and today's reading of the February Markit Services PMI for the UK largely disappointed FX traders with an unexpected decline to 53.2, just off the 53.3 that had been predicted.
The GBP/USD was, as a result, trading lower as of 11:07 am in London, at $1.2780, a loss of 0.2388% and off the session low of $1.27715 while the peak was at $1.28331. The EUR/GBP was trading flat at 0.8717 Pence; the pair has ranged from 0.86995 Pence to 0.87457 Pence in this session.
Bank of Canada Decision in Focus
A number of potentially market moving events will be occurring during the trading day, not the least of which is the interest rate decision from the Bank of Canada. Currently, analysts are still anticipating the the BOC will hold rates at the current level of 1.75%. The Fed's emergency rate cut is weighing on investors' expectations, however, and many believe the BOC will surprise markets with an emergency rate cut. In the event the Canadian central bank maintains the status quo, and given yesterday's conference call regarding the central banks' response to the Coronavirus outbreak, FX traders will want to know of the BOC's intent, which should be made clear via the policy statement. The USD/CAD is currently trading at C$1.3356, down 0.20%, with the pair ranging from a trough of C$1.33439 to C$1.33887.