The Pound weakened towards 1.5850 against the U.S Dollar on Wednesday before recovering through the course of the day, as the U.S currency came under additional selling pressure.
There were no major domestic economic reports released in the UK yesterday following the early PMI services sector release. The PMI data continued to trigger some improvement in sentiment towards the Pound.
The Bank of England will hold its regular policy meeting this lunchtime with markets expecting no changes in rates or the amount of quantitative easing, particularly following the manufacturing and services data this week. Therefore, the Pound is likely to be buffeted by Euro-zone policy announcements with the ECB expected to cut interest rates by 25 basis points and announce a program to purchase bonds in order to restore confidence in the outlook.
The Euro initially retreated towards 1.25 against the U.S Dollar, after the latest Euro-zone PMI index remained weak, which unsettled the Euro to a degree amid further concerns surrounding the German growth outlook for 2013. There was a number of leaked reports surrounding the potential ECB bond purchasing program, which is set to be announced this afternoon and could have a significant impact on market sentiment.