It looks like Forex Gump was correct in saying the pound has become the “European safe haven” currency. Even though risk appetite faded in the financial market, the pound was able to post spectacular gains against both the dollar and the euro. GBP/USD ended the day with a 109-pip gain while EUR/GBP closed 57 pips lower.
On the economic front, the manufacturing production report showed a 0.7% decline, worse than both the 0.1% decrease initially predicted and last month’s 0.1% gain. The industrial production report also shared the same story as it showed a 0.7% fall versus the 0.3% decline forecast.
Today, all eyes will be on the pound as the Bank of England (BOE) announces its decision on interest rates. The market widely expects the BOE to keep rates unchanged at 0.50% so pay attention instead to the central bank’s tone on the accompanying statement. If the BOE updates the market that their quantitative easing program is working, we could see the pound skyrocket across the board again.