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Forex News: Pound Weakens Ahead Of Fed Decision

Pound Weakens Ahead Of Fed Decision

11/03/2021 - 07:05:00 (RTTNews)

(RTTNews) - The pound fell against its major counterparts in the European session on Wednesday, as investors became cautious ahead of the monetary policy decision from the U.S. Federal Reserve, which is expected to reduce its monthly bond purchases amid inflationary pressures.

Market participants hope that the Fed will begin tapering its 120 billion asset purchases from this month and end the program by the middle of next year.

On Thursday, the Bank of England is expected to raise rates for the first time in more than three years in the wake of a surge in inflation.

Final survey results from IHS Markit showed that the UK service sector registered a sharp growth momentum in October driven by robust new work amid the reopening of the economy and looser international travel restrictions.

The headline Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 59.1 in October from 55.4 in September. The flash reading was 58.0.

The pound edged down to 154.97 against the yen and 1.2407 against the franc, off its early highs of 155.27 and 1.2464, respectively. The pound is poised to locate support around 152.00 against the yen and 1.22 against the franc.

The pound reversed from an early high of 0.8495 against the euro, dropping to 0.8513. If the pound falls further, 0.87 is likely seen as its next support level.

The pound slipped to 1.3607 against the greenback, but it has since recovered to 1.3632. At yesterday's close, the pair was worth 1.3610.

Looking ahead, U.S. ADP private payrolls data for October is scheduled for release at 8:15 am ET.

U.S. ISM services PMI for October and factory orders for September will be out in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0-0.25 percent.

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