GBP pressured as Bailey backs more bond buying

GBP/EUR has fallen sharply through 1.1600 after a sustained period of 7 days comfortably above that level. After weakening yesterday evening, GBP selling continued this morning. 

GBP/USD has come under heavy selling pressure after the Bank of England Governor Andrew Bailey said that the central bank will continue bond purchases this year. 

GBP  accelerated its retreat from the 1.3900 level, as the bulls now look to test the 1.3800 threshold. The recovery in the US Treasury yields limits the dollar’s decline adding to the weight on this currency pair..

Investors look forward to the US Retail Sales release for near-term trading opportunities. 

More importantly we have the US Federal Reserve meeting today and tomorrow, with details released on Wednesday evening. 

Later this morning German ZEW data is expected to show an increase in confidence and activity after recent data was very weak. This may support the EURO and harm GBP/EUR yet further. 

Thursday is a critical day for GBP and EUR as both Central Banks have meetings and press conferences. Bailey’s comments are clearly meant to lessen the surprise ahead of Thursday’s Press Conference, but the market will be studying every word for guidance.