UK Preliminary Quarterly GDP is out on Thursday at 09:00 MT time.
UK pound sinks to 7-month low
On Thursday, the UK pound headed south to a 7-month low after the Bank of England deputy chairman John Cunliffe drew attention to the risks of surge in the debt burden of UK households. In addition to this, worries about Brexit went up too.
The currency pair GBP/USD edged down by 0.26% trading at 1.3080, which is the lowest value since November 6.
The British pound dived after Canyliff expressed his concern as for the high debt burden of British households that could potentially lead to a recession in the country’s economy.
He pointed out that in the historical perspective the debt burden of British households turns out to be high, although the owners of households make huge efforts to have these debts reduced. Nevertheless, this issue keeps generating worries.
Besides this, the UK statesman also repeated the position of the British major financial institution that the interest rate lift needs to be limited and gradual.
Earlier this week, predictions as for the interest rate hike in the short term have already slumped after a new official of Britain’s major bank, Jonathan Haskell, told that the UK economy might edge down stronger than previous estimates.
The UK statesman added that the Bank of England might even have the interest rate lowered a bit in case of a recession in the British economy.
Besides this, worries about Brexit edged up after Leo Varadkar, the Prime Minister of Ireland, told that he was disappointed by the lack of progress in talks on the conditions for Britain’s withdrawal from the European bloc.
As a result, the common currency managed to tack on to a three-week maximum versus the major British currency. As a matter of fact, the currency EUR / GBP edged up to a session peak of 0.8838 before diving to 0.8827.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.