The Bank of England meeting last week delivered the as-expected interest rate pause,
and a split on the policy committee of 6:3 in favour of such. However, it was Friday’s
nasty miss in the US Non-Farm Payroll data which caused some impressive strength in
sterling as heavily short speculators were forced to partially close their positions, causing
some sterling strength across several pairs.
Last week’s Bank of England meeting was a muted affair, delivering a further rate
‘pause’. Friday saw a significant technically bullish development in GBPUSD and
delivered the first properly weak economic data out of the US in some time, squeezing
the heavy sterling short position which had built throughout the late summer.
The euro’s resolve to keep holding above 1.0530 was a precursor to last Friday’s
‘fireworks’, (quite apt for the time of year!) where FX markets reacted strongly to the first
proper weak piece of economic data out of the US for some time. The euro’s ability to
forge further gains in the near term will be driven by how much the market is willing to
enact a ‘U-Turn’ on the dollar.