BoE slightly modified its bond buying but GBP quickly took back the losses; USD under pressure ahead of non-farm payrolls due to rising risk appetite

• GBP takes back losses against USD after BoE announced changes on bond buying
• USD under pressure ahead of non-farm payrolls due to rising risk appetite
• Reuters poll: CAD likely to give back some of its gains in the mid to long-term

GBPUSD quickly regained after a slide due to Bank of England’s announcement that it will cut the weekly bond buying from £4.4 billion to £3.4 billion. The year-end target remains unchanged at £875 billion. On the rate decision, BoE kept it unchanged at 0.1% which made investors believe that it was in no rush to change the easing policy. The tweak to its bond buying coincided with the updated economy outlook, which is now expected to grow at 7.25% this year, the fastest pace in more than seven decades. However, BoE was quick to stress that, these changes should not be viewed as a signal on the monetary policy. GBPUSD is currently trading at 1.3907, up about 0.19% since openings.

USD has been under pressure today, with DXY Index trading at 90.867, the lowest level in the week after losing about 0.4% overnight. We will soon have the official non-farm payrolls released today, and the expected figures are 978k for new jobs, and 5.8% for the unemployment rate. The latest jobless claims show that, number of new filings fell below 500k for the first time since the onset of the pandemic, showing an impressive strength and a booming economy. Major declines came from Virginia, Florida, New York and California. While positive data confirm the strength of the US economy, they will also likely boost the risk appetite which will in turn put USD under pressure.

According to a recent Reuters poll, CAD is expected to give back some of its recent gains in the mid to long-term as BoC taks a more hawkish stance. About 40 strategists participated in the poll and the median forecast is for CAD to weaken about 1% over the next three months to 1.24 per USD. CAD has climbed 3.7% since the start of the year, making it the biggest winner among G10 currencies. The rise can be primarily attributable to higher commodity prices such as oil, which is one of Canada’s major exports.