Forex Today: BoE rate decision, key US data to keep volatility going

Here is what you need to know on Thursday, August 1:

Following a volatile American session that featured the Federal Reserve's (Fed) policy announcements and Fed Chairman Jerome Powell's press conference, market attention shifts to the Bank of England's (BoE) rate decision on Thursday. In the second half of the day, weekly Initial Jobless Claims, second-quarter Unit Labor Costs and ISM Manufacturing PMI data for July will be featured in the US economic docket.

The Fed left its monetary policy settings unchanged following the July 30-31 policy meeting, as expected. In the post-meeting press conference, Chairman Powell noted that there was a "real discussion" about the case for reducing rates at this meeting. He added that a strong majority supported not moving rates at the meeting but said that a rate cut could be on the table in September. The US Dollar (USD) Index came under bearish pressure following these comments and lost 0.4% on a daily basis. Early Thursday, the index stages a technical rebound and trades modestly higher on the day above 104.00. Meanwhile, US stock index futures trade marginally higher following the risk rally seen on Wednesday. Finally, the benchmark 10-year US Treasury bond yield fluctuates above 4% after touching its weakest level since February with a daily loss of more than 2%.

The BoE is forecast to lower the policy rate by 25 basis points to 5%. There is, however, still a strong chance that the BoE could opt to maintain the bank rate. Hence, Pound Sterling's volatility could ramp up, depending on the BoE announcements and vote split. At 11:30 GMT, BoE Governor Andrew Bailey will speak at a press conference and respond to questions from the press. GBP/USD benefited srom the selling pressure surrounding the USD and registered small gains on Wednesday. The pair stays on the back foot early Thursday and was last seen trading at its lowest level in three weeks below 1.2800.

The Japanese Yen rallied against its major rivals following the Bank of Japan's unexpected decision to raise its policy rate on Wednesday. After losing nearly 2% on Wednesday, USD/JPY extended its slide and touched its lowest level since mid-March near 148.50 during the Asian trading hours on Thursday. Heading into the European session, the pair staged a rebound and was last seen trading little changed on the day at around 150.00.

EUR/USD posted marginal gains on Wednesday but failed to preserve its bullish momentum. The pair struggles to regain its traction in the European morning and trades in the red slightly above 1.0800.

After rising more than 1% on Wednesday, Gold extended its rally and gained 1.5% on Thursday. After touching a two-week-high of $2,458 in the Asian session on Thursday, XAU/USD went into a consolidation phase and was last seen trading little changed on the day near $2,445.