The pound may have been stable for the most part of the day, but the bears sure do know how to rock things up at the end of the day! GBP/USD, after trading within a 50-pip range for the entire Asian and European trading session, was sold-off heavily during the U.S. session when Egan-Jones, a credit rating agency, announced that it had downgraded Spain’s rating to CCC+ with a negative outlook.
Looking ahead, it seems that GBP/USD has room to fall further. Apparently, traders are speculating that the Bank of England (BOE) could opt for more monetary easing later this year to protect the British economy from the spillover effects of the euro zone crisis. Traders believe that the BOE could expand its quantitative easing program to 450 billion GBP from the current 325 billion GBP.
The U.K.’s economic calendar for today presents nothing of interest as only the CB Leading Index is scheduled for release. Historically, the index hasn’t had an impact on GBP/USD at all. I don’t suspect the upcoming release to be any different!