Forex News: Pound Rises As Traders Await BoE Monetary Policy

Pound Rises As Traders Await BoE Monetary Policy Meeting

(RTTNews) - The British pound strengthened against other major currencies in the European session on Tuesday, as traders shift their focus to the Bank of England's (BoE) monetary policy announcement on Thursday.

Traders have priced in a 25 basis points (bps) decrease in interest rates by the BoE, which will lower borrowing rates to 4%. During the most recent policy meeting, the BoE maintained interest rates and indicated a strategy of "gradual and careful" monetary expansion.

Investors will closely monitor the Bank of England's monetary policy guidance for the rest of the year, particularly as labor demand in the United Kingdom (UK) is under pressure from rising employer contributions to social security schemes and persistent inflationary pressures.

Market participants will also monitor the press conference held by BoE Governor Andrew Bailey for indications regarding the anticipated monetary policy actions of the central bank for the rest of the year.

European stocks advanced as investors digested a slew of earnings updates and held onto hopes that the U.S. Federal Reserve may soon pivot to monetary easing.

In economic releases, business activity in the euro zone grew at a slightly faster pace in July than in June, a survey showed.

The HCOB Eurozone Composite Purchasing Managers' Index, compiled by S&P Global, rose to 50.9 from 50.6 in June - coming in below a preliminary estimate of 51.0.

Separately, Eurostat said that Eurozone producer prices rose 0.8 percent in June compared to May.

Traders are currently nearly entirely factoring in a Federal Reserve interest rate reduction in September.

In the European trading today, the pound rose to a 4-day high of 0.8680 against the euro and a 5-day high of 1.0780 against the Swiss franc, from early lows of 0.8713 and 1.0730, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.85 against the euro and 1.09 against the franc.

Against the yen and the U.S. dollar, the pound edged up to 196.36 and 1.3295 from early lows of 195.04 and 1.3260, respectively. The pound may test resistance around 200.00 against the yen and 1.36 against the greenback.

Looking ahead, Canada and U.S. trade data for June, U.S. S&P Global and ISM PMI reports for July and U.S. RCM/TIPP economic optimism index for August are slated for release in the New York session.

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