GBP/USD retreats ahead of BoE minutes
Sterling has slipped in overnight trading as a sense of normality has returned to the currency markets in the wake of the Russian red alert yesterday. The pound saw an inflow of funds as the rouble plunged, despite the best efforts of the Russian central bank to stabilise the currency. The Russian saga is likely to stay in the news for the foreseeable future and any additional rumblings could give a boost to GBP/USD.
At 9.30am (London time) the Bank of England will release minutes from its latest meeting, and traders are anticipating two of the nine members to vote in favour of a rate rise and the remaining seven members to hold steady. Inflation in the UK has dropped to its lowest level in 12 years. Declining commodity prices could push UK CPI below 1% in the coming months but I feel this will be a problem for GBP/USD in early 2015. Looking towards the rest of the year the pounds safe-haven status will serve it well.
If the GBP/USD drifts lower it could find support in the $1.5640 region, and traders will be eyeing the 50-day moving average of $1.58 as the near-term target.