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02/08/24
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Sterling Weak After BoE Rate Cut
On Friday, GBP/USD fell 0.1% to 1.2734 in European trading, after earlier dropping to as low as 1.2708 for the first time since Jul. 3 after the Bank of England’s decision on Thursday to reduce interest rates.
BoE Governor Andrew Bailey led a 5-4 decision to cut rates by 0.25% to 5% and said the bank would be cautious going forward, indicating a steady pace of cuts.
EUR/USD gained 0.3% to 1.0820 as it bounced after dropping a 3-week low of 1.0777 overnight.
Thursday’s data showed the eurozone manufacturing sector activity in July stayed in contraction territory, indicating the European Central Bank will need to reduce interest rates again this year to bolster the slowing economy.
ING analysts said in a note the eurozone calendar was empty today, and there was now a seasonally quiet period not only for data but also for speakers from the ECB. This was probably a good thing for the euro given how poor eurozone activity indicators have been lately.
USD/JPY dropped 0.3% to 148.84 as the yen continued to soar after the BOJ increased interest rates by 0.15% and indicated more hikes would potentially come in 2024, as it cited some improving trends in Japan’s economy.
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