Forex Today: Eyes on Bank of England's policy announcements

Here is what you need to know on Thursday, August 4:

With FOMC policymakers pushing back against the market view of the Fed possibly starting to lower policy rate in the second half of the day, the dollar preserved its strength against its rivals on Wednesday. Market action remains relatively subdued in the early European morning as investors wait for the Bank of England (BOE) to announce its policy decisions. Later in the day, the US economic docket will feature the weekly Initial Jobless Claims and June Goods Trade Balance data. Meanwhile, US stock index futures trade flat on the day, pointing to a cautious mood.

BOE Rate Decision Preview: Bailey to follow Powell’s footsteps with a dovish hike.

Richmond Fed President Tomas Barking said on Wednesday that recession fears were slightly inconsistent with monthly jobs growth of nearly 400,000 and an unemployment rate of 3.6%. St. Louis Fed President James Bullard reiterated that he would want the policy rate to move up to the 3.75-4% rate this year. Finally, San Francisco Fed President May Daly argued that markets are getting ahead of themselves by expecting rate cuts next year.

The BOE is expected to hike its policy rate by 50 basis points to 1.75% following its policy meeting. Previewing the BOE event, "the BOE is set to raise rates by 50 bps on Super Thursday, but also likely to paint a gloomy picture that would lower expectations for the path of further hikes," said FXStreet analyst Yohay Elam. "This complex event has several twists and turns, but more likely than not to result in sterling suffering."

Bank of England Preview: Bailey to deal blow to pound with dovish hike, what to watch for.

In the meantime, the Organization of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, have agreed to raise the oil output by 100,000 barres per day in September.

EUR/USD pair posts modest daily gains on Thursday but continues to trade below 1.0200. Earlier in the day, the data from Germany showed that Factory Orders declined by 0.4% on a monthly basis in June and were down 9% annually.

GBP/USD stages a modest recovery and trades above 1.2150 after having closed the previous two days in negative territory.

USD/JPY preserves its bullish momentum early Thursday and trades above 134.00. “Investors should start preparing for a return to normal Japanese bond trading as the central bank will one day step back from its debt purchases,” Japan's Ministry of Finance, Michio Sato, said earlier in the day but these comments failed to help the JPY find demand.

Following Tuesday's sharp decline, gold managed to regain its traction and registered modest gains on Wednesday. XAU/USD continues to push higher and was last seen trading in positive territory above $1,770.

Bitcoin continued to edge lower for the sixth straight day on Wednesday and seems to have steadied around $23,000 early Wednesday. Ethereum continues to fluctuate in a relatively tight channel near $1,600.