The British currency dropped to a 2 and a half month low in today’s Asian session, falling to a low of 1.6025as the Bank of England hinted towards a chance of further stimulus, where as the US Federal Reserve has come across firm in its current stance for no further monetary support. The release of the minutes from the Bank of England, signaled that the UK interest rates were likely to remain at their current level of 0.5%, and as such it is presumed that the BoE may opt for more quantitative easing.
The GBPUSD pair opened up today’s Asian session around 1.6106 and steadily dropped throughout the session by over 50 pips thus far. The recent level of the sterling sees it moving below a previously seen key support level at 1.6075 and should the trend continue in this manner we may expect the British poud to drop to as low as 1.5960 – the current 161.8% Fibonacci extension level of the June 16th to June 22nd rise; a period in which the Sterling gained over 170 pips against the Dollar.
News from China are expected at 02:30 GMT, where HSBC’s Manufacturing PMI is due to be released. A sign of further softness could put pressure on risk traders and commodity currencies such as the AUD.