EURGBP retreats ahead of ECB, BOE monetary decisions

The EURGBP retreated on Wednesday to resume its downside direction, ahead of ECB and BOE monetary decision tomorrow.   

All eyes will focus on Thursday’s monetary decision and press conference by the ECB, as Draghi will provide details about the bank’s quantitative easing program.  

The ECB meeting will also give an update about the economic conditions in the 19-nation region while will decide on whether to maintain emergency loans for struggling Greek banks.

For the euro area countries, the weak currency is giving them a competitive edge, but for the U.K., the sterling’s appreciation weighs negatively on their overseas trading.

Less attention will be given to the BOE meeting, as the bank is predicted to hold both its interest rates and amount of asset purchases.

The BOE will probably raise interest rates next year, to become the first major central bank to hike borrowing cost after the Federal Reserve.

Data released today from the U.K. showed that the services sector retreated more than forecasts to 56.7 in February, compared to January’s reading of 57.2.  

Yet, U.K. manufacturing and construction data released this week showed the later rose to a four-month high in February while the former climbed to a seven-month high.