Pound Falls Against Dollar on Dovish Bailey Comments, Later Recoups Losses

The Sterling pound fell against the dollar as markets reacted to dovish comments by the Bank of England Governor regarding the bank’s bond purchases. The GBP/USD currency pair recovered most of its losses later in the session largely due to the dollar’s weakness as more European countries halted AstraZeneca’s vaccine’s rollout.

The GBP/USD currency pair fell from an opening high of 1.3900 in the Australian market to a low of 1.3809 in the early London session but had recouped all its losses at the time of writing.

The currency pair’s initial decline was fueled by Andrew Bailey‘s dovish stance regarding the Bank of England‘s current bond purchases. The BoE Governor appeared keen to maintain the current high rate of bond purchases despite the UK’s ongoing economic recovery. Several EU countries’ decision to suspend AstraZeneca’s vaccine’s rollout also weighed on the dollar, although the UK has not reported any major issues. The EU’s decision to start legal action against the UK due to the Northern Ireland protocol also weighed on the pound.

The pair did not initially benefit from the dollar’s overall weakness as tracked by the US Dollar Index but later rallied higher. The release of the downbeat US retail sales data for February drove the cable higher. According to the Census Bureau, US headline retail sales fell 3% in February versus the consensus estimate of a 0.5% decline.

The currency pair’s future performance is likely to be affected by US dollar dynamics and geopolitical events, given tomorrow’s empty UK docket.

The GBP/USD currency pair was trading at 1.3897 at 17:33 GMT, rising from a low of 1.3809. The GBP/JPY currency pair was trading at 151.43 after falling from a high of 151.75.

© SimonMugo for Forex News, 2021. |
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Post tags: Andrew Bailey, Bank of England, Census Bureau, Coronavirus, COVID-19 Vaccine, European Union, GBP/JPY, GBP/USD, Pound, Quantitative Easing, Retail Sales, United Kingdom, US Dollar Index

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Author: Simon Mugo