Pound slipped on Thursday, after the Bank of England announced that it is leaving monetary policy unchanged. Meanwhile, euro traded sideways, but could proceed into a decline if bullish traders remain inactive in the market.

Going back to the UK central bank, the nine members of the committee unanimously decided to keep the base rate at 0.1% and maintain the volume of bond purchases at £ 895 billion (£ 20 billion for existing bonds and £ 875 billion for government bonds) ... This is in contrast with the position of Chief Economist Andy Haldane, who wanted to reduce the volume of bond purchases to £ 825 billion because of the rapidly growing price pressures.

The Bank of England also said they have no intention of tightening policy, at least until there is clear evidence that the economy is progressing very significantly. To be more specific, they want to see decreased unemployment and inflation at 2%.

At the moment, inflation is above the target level, mainly due to a sharp jump in prices. But the central bank believes that it will return to acceptable levels once demand has calmed down. They also project GDP to grow to 5.5% this 2nd quarter.

All this led to a decline in pound, but a lot will depend on 1.3940 today because going above it will result in a jump towards the 40th figure. Meanwhile, dropping further below will lead to a plunge to 1.3890, and then to the bottom of the 38th figure.

EUR

Euro remained in a horizontal channel on Thursday, even amid strong reports from Germany. According to recent data, the business sector grew very sharply in June, thanks to the relaxation of restrictions related to the coronavirus pandemic. IFO said the business climate index rose to 101.8 points, while the index of current conditions climbed to 99.6 points. As for expectations, the index jumped to 104.0 points.

Data on exports was also released yesterday. According to the report, it rose very sharply in May, thanks to increased shipments to US and UK. All in all, the sum reached € 48.4 billion and grew by 27.9% year-on-year.

In France, business confidence remained stable, staying at 107 points in June.

Despite this, euro traded sideways, not managing to break out of the existing range. But today, a lot depends on 1.1910 because going above it will result in a further climb towards 1.1970, 1.2030 and 1.2105. If the euro drops below 1.1910, the quote will move lower to 1.1880 and 1.1845.

With regards to the United States, a report on weekly jobless claims was released yesterday, which indicated that there is a moderate recovery in the labor market. Initial claims for unemployment benefits fell to 411,000, down 7,000 from the previous week's revised level.

As for GDP, the Department of Commerce said real data grew to 6.4% in the first quarter, which is in line with the estimate presented last month.