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Pound Climbs As BoE Keeps Interest Rate On Hold
The pound advanced against its major trading partners in the European session on Thursday, as the Bank of England kept its interest rate unchanged in a split vote at its final meeting of the year, saying that it was too early to judge the impact of recent domestic policy developments in economy.
At the Monetary Policy Committee meeting, Governor Mark Carney and six other members voted to maintain the interest rate at 0.75 percent. Meanwhile, Jonathan Haskel and Michael Saunders repeated their call for a quarter point reduction.
The committee unanimously decided to retain the stock of corporate bond purchases at GBP 10 billion and government bond purchases at GBP 435 billion.
The MPC judged that the existing stance of monetary policy is appropriate.
Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2 percent target, the bank said.
Data from the Office for National Statistics showed that UK retail sales declined unexpectedly in November as consumers curbed spending ahead of general election.
Retail sales volume, including auto fuel, decreased 0.6 percent on a monthly basis, after remaining unchanged in October.
The pound rose against its major counterparts in the Asian session, except the euro.
The pound added 0.6 percent to 1.2873 against the franc, after falling to over a 3-week low of 1.2798 at 6:55 am ET. At yesterday’s trading close, the pair was valued at 1.2819. Should the pound rallies again, it is likely to face resistance around the 1.30 region.
Data from the Federal Customs Administration showed that Switzerland’s exports declined for the second straight month, while imports recovered in November.
Exports decreased by real 0.8 percent month-on-month in November, while imports rose 0.5 percent.
The GBP/USD pair gained 0.6 percent, reaching as high as 1.3132 following the announcement. This followed a new 2-week low of 1.3049 seen at 6:55 am ET. The pound-greenback pair had ended yesterday’s trading session at 1.3078. Further rise in the pound may find resistance around the 1.34 area.
After dropping to a 1-week low of 142.87 against the yen at 6:55 am ET, the pound rebounded to 143.76 in a short while. The currency is thus not far from a 2-day peak of 143.86 it logged at 3:15 am ET. The pair had closed Wednesday’s deals at 143.25. Extension of the pound’s uptrend may lead it to a resistance around the 146.00 region.
The Bank of Japan kept its massive monetary stimulus unchanged, as widely expected.
The Policy Board of the BoJ voted 7-2 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.
Having declined to a fresh 2-week low of 0.8521 against the euro at 6:55 am ET, the pound gained traction, rising 0.5 percent to a 2-day high of 0.8476. The pair was worth 0.8496 when it closed deals on Wednesday. Next immediate resistance for the pound is possibly seen around the 0.83 level.
In economic releases, Canada wholesale sales for October, U.S. weekly jobless claims for the week ended December 14, existing home sales and leading index for November will be featured in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com
