Pound Advances After BoE Surprises With 5-3 Split Vote On Rates
15 Juin 2017 - 10:07AM
RTTF2
The pound climbed against its key counterparts in the European
session on Thursday, erasing early losses, as the Bank of England
kept its key rate unchanged in a split vote, with more policymakers
calling for a rate hike to tackle inflationary pressures.
The Monetary Policy Committee voted 5-3 to hold the interest
rate at a record low of 0.25 percent but unanimously voted to
maintain the quantitative easing at GBP 435 billion, the bank said
in a statement.
Along with Kristin Forbes, Ian McCafferty and Michael Saunders
also sought a 25 basis point increase in interest rate.
For three members, the outlook now justified an immediate
increase in Bank Rate.
Nonetheless, all members agreed that any increases in Bank Rate
would be gradual, and to a limited extent.
There were arguments in favor of a moderate tightening in
monetary policy. The withdrawal of part of the stimulus that the
Committee had injected in August last year would help moderate the
inflation overshoot while leaving monetary policy very supportive,
the minutes showed.
The currency fell early in the European session, weighed by
weaker than expected UK retail sales as well as on rising aversion
after a relatively hawkish Fed statement and news of U.S. President
Donald Trump being investigated for obstruction of justice in
Russia probe.
Data from the Office for National Statistics showed that UK
retail sales declined more than expected in May.
Retail sales volume including auto fuel declined 1.2 percent
month-on-month in May, reversing a 2.5 percent rise in April. Sales
were forecast to drop 0.8 percent.
The pound was trading lower against most major rivals in the
Asian session.
The pound appreciated to a 6-day high of 0.8727 against the
euro, up by 0.8 percent from Wednesday's closing value of 0.8797.
The next possible resistance for the pound is seen around the 0.86
region.
Preliminary data from Eurostat showed that the euro area trade
surplus decreased in April from a month ago, as exports fell faster
than imports.
The seasonally adjusted trade surplus fell to EUR 19.6 billion
in April from EUR 22.2 billion March. Economists had expected the
surplus to drop slightly to EUR 22.0 billion.
Having fallen to a 2-day low of 1.2691 against the greenback at
5:30 am ET, the pound reversed direction and moved up to 1.2796. On
the upside, 1.30 is likely seen as the next resistance for the
pound-greenback pair.
The pound advanced to 140.47 against the Japanese yen, following
a decline to 139.19 at 4:30 am ET. The pound is seen finding
resistance around the 142.00 level.
The currency strengthened to a 6-day high of 1.2468 against the
Swiss franc, reversing from a low of 1.2356 hit at 5:15 am ET.
Continuation of the pound's uptrend may see it challenging
resistance around the 1.26 area.
The Swiss National Bank maintained its expansionary monetary
policy and reaffirmed its stance to remain active in the foreign
exchange market to prevent the franc from appreciating.
The interest rate on sight deposits at the central bank was kept
unchanged at -0.75 percent and the target range for the three-month
Libor was retained between -1.25 percent and -0.25 percent.
In the day's schedule, U.S. weekly jobless claims for the week
ended June 10, NAHB housing market index for June, import price
index and industrial production for May are set for release in the
New York session.
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