Pound Spikes Up As BoE Leaves Interest Rate On Hold
The pound strengthened against its key counterparts in European deals on Thursday, as the Bank of England policymakers unanimously decided to keep the interest rates unchanged, while observing that "it is more likely than not that" the key rate would rise in the next few years.
The Monetary Policy Committee, headed by Mark Carney, voted 9-0 to hold the interest rate at 0.50 percent, the BoE said in a statement.
The rate has been held at this record-low level since 2009. McCafferty dropped his call for a quarter point rate hike in February for the first time since July.
Policymakers also unanimously voted to maintain quantitative easing at GBP 375 billion.
The MPC is of the view "that it is more likely than not that Bank Rate will need to increase over the forecast period to ensure inflation returns to the target in a sustainable fashion," the minutes showed.
The pound was weaker against most major rivals in Asian deals, as Chancellor of the Exchequer George Osborne downgraded growth and inflation forecasts for this year, citing weak global economic outlook.
Reversing from an early near 3-week low of 0.7911 against the euro, the pound appreciated by 0.9 percent to a 2-day high of 0.7837. The pound is seen finding resistance around the 0.77 level.
Final data from Eurostat showed that Eurozone consumer prices declined for the first time in five months in February as initially estimated.
The harmonized index of consumer prices fell 0.2 percent year-on-year following a 0.3 percent rise in January. The annual rate matched the flash estimate published on February 29.
Continuing its early rally, the pound added 1.2 percent to 6-day high of 1.4426 against the dollar. At yesterday's close, the pair was valued at 1.4258. On the upside, the pound may locate resistance near the 1.46 region.
The pound advanced to a 2-day high of 1.3989 against the franc, up by 0.76 percent from early more than 2-week low of 1.3884. The pound is poised to find resistance around the 1.42 area.
The Swiss National Bank retained its expansionary monetary policy and repeated that it will remain active in the foreign exchange market.
The interest rate on sight deposits at the central bank was maintained at -0.75 percent, and the target range for the three-month libor between -1.25 percent and -0.25 percent.
The pound reversed from an early fresh 2-week low of 159.00 against the Japanese yen, rising back to 160.92. The currency is thus heading to violate its Asian session's 2-day high of 161.05. If the pound extends rally, it may challenge resistance around the 162.5 mark.
Looking ahead, U.S. leading indicators for February are slated for release shortly.
The material has been provided by InstaForex Company - www.instaforex.com
