Sterling stumbled and could surrender its recent gains amid concerns that Governor Mark Carney, who will be speaking next week, will make another attempt at guiding financial markets with more communication on the Bank of England’s new dovish forward policy guidance. The US dollar snapped back across the board, hitting new highs against emerging market currencies which have forced Brazil’s central bank to launch $60 billion FX intervention programme. The euro has pushed back against its US counterpart after the European Central Bank’s Ewald Nowotny followed up solid eurozone PMI data with soothing comments about future euro area monetary policy.

GBP

Sterling fell and could remain under pressure over the coming days after dovish comments from one Bank of England member who underlined the risk that Governor Mark Carney could use a speech next week to offer more forward guidance on monetary policy. Martin Weale, a voting MPC member, unsettled sterling after he claimed that additional quantitative easing is still an option should UK economic growth disappoint.

EUR

The euro found support from solid data and may hold current levels heading into next week after the European Central Bank’s Ewald Nowotny said that an upturn in eurozone economic data has removed the need for further ECB rate cuts. Uncertainty surrounding the Federal Reserve’s monetary stimulus plans did weigh on the single currency but the euro posted gains against sterling after encouraging PMI data.

USD

The US dollar snapped back from a two-month low against a basket of currencies to hit a one-week high as markets continued to react to Wednesday’s Federal Reserve minutes which did little to unravel growing expectations about a September taper. The greenback reached new highs against emerging markets currencies and may strengthen against its major counterparts over the coming weeks ahead of the Fed’s September 18 monetary policy announcement.