Pound failed to hit local highs on Monday as many traders closed long positions in anticipation of the Bank of England monetary policy meeting scheduled this week. Apparently, they expect the central bank to follow the actions of the US Federal Reserve, which is to maintain a soft policy despite a rapidly growing inflation rate. But in the case of UK, inflation is not that high, so it is understandable why the central bank does not plan to change its dovish stance yet. However, there are some points that increased uncertainty, such as the sharp increase in COVID-19 cases due to the Delta strain of the virus. More recently, reports show that the number of infections in the country rose after the European Football Championship, but authorities claim that the situation remains under control.

In any case, the Bank of England will wait for the latest data on the labor market before making any decisive action. Vaccination rate will also be of great importance. And even though there are rumors about negative interest rates, BoE Governor Andrew Bailey will most likely remain firm in his opinion that such a method is not of great help to the current state of the economy. Thus, he and most of the central bank members are likely to vote to keep rates at 0.1%, at least until the end of 2022.

With regards to macro statistics, UK released a report yesterday that indicated a slowdown in the index of confidence in the manufacturing sector. The IHS Markit said problems with supplies hindered the pace of production, so the July data for new orders and jobs were also not up to par. All in all, PMI was 60.4, which is in line with preliminary estimates, but below the May high of 65.6.

As for the GBP / USD pair, bullish traders did not manage to push the quote to all-time highs, so the pair turned down again. If the price drops below 1.1875, the pair will most likely plunge to 1.3840, and then to the base of the 38th figure. But if the quote climbs above 1.3915, GBP / USD will rise to 1.3950, and then to 1.3985.

EUR

Similar problems with supplies are observed in the Euro area and the United States. A report from IHS Markit said manufacturing PMI in the EU slowed in July, but the pace of recovery remained fairly strong. All in all, the index fell to 62.8 points, from 63.4 points in June.

And even though the growth rate of new business was high and approached the March record, the growth rate of export orders, on the contrary, became the lowest in the last five months. At the same time, manufacturers faced serious problems on supply and transport accessibility, so prices for production resources increased sharply.

As for the US, the ISM said manufacturing PMI fell to 59.5 points in July, from 60.6 points in June. The main reason was the same as in the Euro area and UK, which is a decline in both production and new orders. The latest data said the production index fell to 58.4 points, while the new orders index dropped to 64.9 points.

With regards to retail sales, Destasis said growth surprisingly exceeded expectations, thanks to the easing of restrictions related to the pandemic. The action boosted consumer demand, so sales jumped 4.2% month-over-month and rose 6.2% year-on-year in June.

All this pushed EUR/USD up, but today a lot will depend on 1.1890 because moving above it will provoke a larger jump to 1.1910, 1.1940 and 1.1980. On the other hand, if the quote drops below 1.1865, EUR/USD will plunge to 1.1840, and then to the base of the 18th figure.

Going back to the US, recent reports say the Senate is considering the approval of the $ 550 billion infrastructure bill. Majority Leader Chuck Schumer said the bill would be passed "within days," but Minority Leader Mitch McConnell made it clear that Republicans would not rush the decision. In any case, the adoption of the bill will significantly affect Americans across the country, as such will help improve roads, develop power grids and benefit various industries.