Pound on the back foot ahead of Super Thursday

A combination of disappointing UK data and dollar demand sent the pound lower on Tuesday. After a break below the 100-DMA and the 1.30 handle, GBPUSD accelerated its downside move and remains under pressure today, extending the losing streak to a fifth day in a row.

Brexit negotiations deadlock adds to the bearish pressure on the cable. It is reported that the UK PM May will meet Juncker on Thursday. Traders have little hope for a meaningful breakthrough on the key issue – the Irish border. However, any signs of progress could cap the selling pressure on the currency.

The major event of week is the Bank of England’s Super Thursday. No changes are expected on a rate hike front, while investors will closely monitor the central bank’s tone on economy and Bexit consequences. But considering a still high level of Brexit-related uncertainty, the monetary authorities will likely prefer a wait-and-see approach.

As such, the meeting could bring little clarity on the policy prospects. Anyway, there are downside risks for the sterling from this event as Carney may highlight economic weakness which in turn will further push back rate hike expectations and put the pound under additional pressure.