ForexLive European FX news wrap: BOE sticks to the status quo, dollar stays firm post-Fed

<p>Headlines:</p><ul><li><a href="https://www.forexlive.com/centralbank/boe-leaves-bank-rate-unchanged-at-525-as-expected-20240201/">BOE leaves bank rate unchanged at 5.25% as expected</a></li><li><a href="https://www.forexlive.com/centralbank/boes-bailey-we-are-not-yet-at-a-point-where-we-can-lower-rates-20240201/">BOE's Bailey: We are not yet at a point where we can lower rates</a></li><li><a href="https://www.forexlive.com/centralbank/bailey-qa-we-need-to-see-evidence-of-services-inflation-easing-back-20240201/">Bailey Q&amp;A: We need to see evidence of services inflation easing back</a></li><li><a href="https://www.forexlive.com/news/us-futures-see-a-light-bounce-treasury-yields-still-looking-heavy-20240201/">US futures see a light bounce, Treasury yields still looking heavy</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-centeno-if-inflation-trajectory-holds-the-next-step-will-be-to-cut-rates-20240201/">ECB's Centeno: If inflation trajectory holds, the next step will be to cut rates</a></li><li><a href="https://www.forexlive.com/news/eurozone-january-preliminary-cpi-28-vs-28-yy-expected-20240201/">Eurozone January preliminary CPI +2.8% vs +2.8% y/y expected</a></li><li><a href="https://www.forexlive.com/news/eurozone-december-unemployment-rate-64-vs-64-expected-20240201/">Eurozone December unemployment rate 6.4% vs 6.4% expected</a></li><li><a href="https://www.forexlive.com/news/eurozone-january-final-manufacturing-pmi-466-vs-466-prelim-20240201/">Eurozone January final manufacturing PMI 46.6 vs 46.6 prelim</a></li><li><a href="https://www.forexlive.com/news/uk-january-final-manufacturing-pmi-470-vs-473-prelim-20240201/">UK January final manufacturing PMI 47.0 vs 47.3 prelim</a></li><li><a href="https://www.forexlive.com/news/switzerland-january-manufacturing-pmi-431-vs-445-expected-20240201/">Switzerland January manufacturing PMI 43.1 vs 44.5 expected</a></li><li><a href="https://www.forexlive.com/news/us-january-challenger-layoffs-8231k-vs-3482k-prior-20240201/">US January Challenger layoffs 82.31k vs 34.82k prior</a></li></ul><p>Markets:</p><ul><li>USD leads, AUD lags on the day</li><li>European equities mixed; S&amp;P 500 futures up 0.5%</li><li>US 10-year yields down 3.4 bps to 3.931%</li><li>Gold down 0.1% to $2,034.35</li><li>WTI crude up 0.3% to $76.07</li><li>Bitcoin down 0.9% to $42,100</li></ul><p>The main highlight of the session was the BOE policy decision and there was plenty to scrutinise on that.</p><p>The central bank dropped its tightening bias, reaffirming its data-dependent guidance and current stance of keeping rates higher for longer. The bank rate votes were interesting, with Haskel and Mann continuing to vote for a 25 bps rate hike. Meanwhile, the most dovish member of the board, Dhingra, voted for a 25 bps rate cut instead.</p><p>The mix of that saw GBP/USD rise from 1.2640 to 1.2660 ahead of BOE governor Bailey's press conference.</p><p>Bailey then emphasised on stickier inflation and that offered no hints of when the central bank might look to cut rates. That helped GBP/USD rise to 1.2880 levels before abating slightly now.</p><p>Looking outside of sterling, the dollar was the dominant force in the FX space. The post-Fed flows are continuing as traders gear towards the US jobs report tomorrow. EUR/USD fell briefly to a seven-week low of 1.0780 before keeping just above 1.0800 again now.</p><p>Meanwhile, the antipodean currencies suffered even with a slight bounce in equities sentiment on the day. AUD/USD is down 0.8% to 0.6515 and threatening a break of key technical levels as highlighted <a href="https://www.forexlive.com/news/audusd-moves-towards-the-brink-again-after-fed-pushback-20240201/" target="_blank" rel="follow">here</a>.</p><p>In other markets, stocks are seeing a light bounce after the heavy sell off yesterday. But with the prospect of non-farm payrolls coming on Friday, we might see any rebound be a more tentative one. As for the bond market, Treasuries continue to look heavy but that isn't quite fazing the dollar so far this week.</p>

This article was written by Justin Low at www.forexlive.com.