Sterling fell almost half a percent in morning trade in Europe this morning, suffering along with a raft of other currencies against the dollar after the U.S. Federal Reserve raised its forecasts for interest rates next year.
It will be interesting to see what type of outlook the BoE offers in light of more solid data and a resilient UK economy in the face of Brexit.
The market has seen a sizable correction towards major resistance at $1.2800 over the past several days. A daily close below $1.2300 will put the immediate pressure back on the downside.
Inflation and wages data this week have both been marginally above forecast and retail sales were forecast to rise by 5.9 percent year on year, however the data showed they rose by a solid 6.6%. This should reinforce the picture of an economy that for now appears to be riding out any turbulence generated by June’s vote to leave the European Union.
Prime Minister Theresa May will update Britain’s partners in Brussels today on her plans to launch talks by March on quitting the EU, and they will settle their arrangements for the negotiations.
Mark Carney will speak after the BoE rate decision this afternoon.