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After weakening sharply against the euro and the dollar yesterday, the pound recovered this morning and hit a 13-month high against the euro. However, volatility could remain during the build up to the Bank of England’s latest monetary policy meeting, which is due to take place tomorrow.
The Federal Reserve will conclude its monetary policy meeting today. Economic growth forecasts are expected to be upgraded due to the US’ efficient vaccine rollout and President Biden’s huge $1.9 trillion stimulus bill.
Concerns over the Oxford-AstraZeneca vaccine continue in Europe, with countries seeking clarification on its safety and the suspensions causing a lag in the vaccine rollout. The European Medicines Agency is due to deliver its verdict on the vaccine’s safety tomorrow.
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GBP: BoE meeting tomorrow
The pound experienced volatility yesterday, declining sharply against both the euro and the dollar. However, it has recovered this morning and is now at strong levels.
It’s thought that the drop yesterday was due to the Bank of England’s upcoming monetary policy meeting, which is due to take place tomorrow. There has been a lack of sterling-positive information in the run up to this meeting, which is perhaps why the pound weakened yesterday.
The meeting will take place at midday tomorrow and the Bank is expected to keep interest rates on hold. The markets will be looking out for any comments relating to the UK’s economic outlook.
GBP/USD chart
EUR: EMA due to release vaccination findings tomorrow
The euro is weaker against the pound and the dollar this morning, as vaccine concerns continue to weigh on the single currency.
The European Medicines Agency will announce its verdict tomorrow on the safety of the Oxford-AstraZeneca vaccine, after concerns that recipients were experiencing blood clots afterwards. It’s thought that they will give the go-ahead for it to be issued, however, it’s likely that many Europeans could still be skeptical about its safety.
Italy has imposed lockdowns and infections are rising in Germany and some areas of France. Infections in Spain, however, are decreasing.
Inflation rate data will be released for the Eurozone later this morning.
USD: Fed expected to upgrade growth forecasts
The dollar is edging higher against a basket of currencies this morning ahead of the conclusion of the Federal Reserve’s latest monetary policy meeting today.
The Fed is expected revise its economic forecasts to include stronger economic growth due to the speeding up of the US vaccination program and the new $1.9 trillion stimulus bill. However, it is thought that they will maintain their stance towards monetary policy.
Fed Chair, Jerome Powell, could also comment on the recent rise of bond yields and projections for future interest rate hikes.
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