News Column

Pound Mixed After BoE Rate Announcement

September 4, 2014

BRUSSELS (Alliance News) - The pound came in mixed against its key counterparts in European deals on Thursday, after the Bank of England left its interest rate unchanged at a historic-low, amid concerns over low wage growth and signs of slowing housing market.

The outcome was widely expected by economists.

At the two-day meeting, the nine-member Monetary Policy Committee governed by Mark Carney voted to maintain the key bank rate at 0.50%. The rate has been at the current 0.50% since March 2009.

The panel also decided to maintain the asset purchase programme at GBP 375 billion. The previous change in asset purchases was in July 2012, when it was raised by GBP 50 billion.

The pound weakened to 1.6437 against the greenback, its lowest since February 10. This is lower by 0.1% from yesterday's closing value of 1.6459. The pound is likely to challenge support around the 1.62 region.

Having fallen to a session's low of 1.5100 against the Swiss franc in prior deals, the pound climbed to 1.5130 amid the BoE announcement. The next possible resistance for the pound may be eyed around the 1.52 region.

The pound edged up to 0.7975 against the euro, coming off from a low of 0.7992 hit at 2:15 am ET. If the pound extends its advance, 0.79 is possibly seen as its next resistance level.

Germany's manufacturing orders rebounded strongly in July, far exceeding economists' expectations, figures from the Federal Statistical Office showed.

Factory orders increased a seasonally adjusted 4.6% from June, when they fell 2.7%, revised from a 3.2% decline. Economists had expected a 1.5% gain for July.

The pound that rose to 172.76 against the yen at 4:35 am ET was trading steadily thereafter. The pair was valued at 172.46 at Wednesday's close.

The Bank of Japan, or BoJ, kept its monetary policy unchanged at its September meeting, the central bank announced Thursday in a statement following the conclusion of its 2-day monetary policy meeting.

The Bank also announced its decision to retain its policy of expanding monetary base at an annual rate of 60-70 trillion yen.

Looking ahead, the European Central Bank is slated to announce its decision on interest rates at 7:45 am ET. The refinancing rate is seen keeping on hold at 0.15%.

The US ADP employment data for August, weekly jobless claims for the week ended August 30, trade data for July and ISM non-manufacturing composite index for August are due in the New York session.

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Source: Alliance News

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