British pound continued losing ground against the US dollar for the second day in a row on Wednesday before Bank of England (BoE) Governor Mark Carney takes a statement amid speculation that he will confirm his intention to maintain the benchmark interest rate at record low level.
GBP/USD fell to its lowest point today at 1.5456 at 11:00 GMT, after which consolidation followed at 1.5467, down by 0.52% for the day. Support was likely to be received at 1.5400, while resistance was to be encountered at current session high, 1.5553.
Mark Carney intended to support economic recovery by introducing interest-rate guidance in order to damp speculation that interest rates will rise. BoE Governor is expected to speak at an event hosted by the Confederation of British Industry (CBI), which will include audience questions after the statement.
“People are set up for dovish comments given that the bank has had little success so far in suppressing forward rate expectations,” said Adam Cole, the London-based head of Group-of-10 currency strategy at Royal Bank of Canada, cited by Bloomberg. “The risk is that a reasonably balanced speech today would be perceived as less dovish than expected. The balance of risks is that we get a little bounce”.
Additionally, earlier today the CBI reported that its indicator of distributive trades advanced to a reading of 27 in the month of August up from 17 in the preceding month, while experts had anticipated an advance to a value of 20.
Today market sentiment was still dominated by mounting concerns of a possible military intervention by the United States in Syria. US President Barack Obama was planning to release later this week an intelligence assessment of the alleged August 21st chemical attack outside of Damascus, while the administration has commenced consultations with US congressional leaders, Bloomberg said. At the same time, the UK, France and Turkey had already agreed to support a possible campaign in Syria.
Elsewhere, the sterling was lower against the euro, as EUR/GBP cross added 0.16% on a daily basis to trade at 0.8631 at 11:23 GMT. GBP/JPY pair was also losing positions, down by 0.16% for the day to trade at 150.65 at 11:24 GMT. Ultimately, pound has strengthened 4.6% during the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro gained 4.9%, while the US dollar advanced 2.2%.
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