Sterling edged up against a broadly weaker dollar ahead of important central bank announcements

The pound reversed its steady decline against the greenback yesterday as investors relinquished defensive positions ahead of today’s MPC announcement.

  • Cautious investors initially sought safety ahead of the two key central bank meetings today, putting pressure on the UK currency.
  • Additionally, in an interview, Kansas City Federal Reserve President Thomas Hoenig said that the US central bank should start raising interest rates “sooner rather than later,” which buoyed confidence in the US economy.
  • However, the greenback’s gains were limited, with the pound rebounding a cent from its intra-day low as investors felt that the market had gone too short on sterling positions ahead of today’s statements.
  • In trading this morning, the dollar has been broadly sold as employment data in Australia beat expectations for a fall in jobs in September, with the rate actually falling to 5.7%.
  • The pound has advanced nearly a cent, consolidating its positions above 1.60, although trading may be volatile following the MPC rate decision, announced at 12:00BST today.