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Pound Mixed After BoE Announcement

The pound showed mixed trading against its major counterparts in the European session on Thursday, after the Bank of England retained its record low interest rate and asset purchase programme, after easing monetary policy at an unscheduled meeting last week.

The Monetary Policy Committee voted unanimously to maintain the interest rate at 0.1 percent and the quantitative easing at GBP 645 billion.

At a special meeting on March 19, the bank had reduced its bank rate by 15 basis points and expanded bond purchases by GBP 200 billion. The bank had reduced the rate twice this month.

The MPC said it can expand asset purchases further if needed.

The nature of the economic shock from Covid-19 is very different from those to which the MPC has previously had to respond, the bank said.

The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimized, the bank added.

Data from the Office for National Statistics showed that UK retail sales declined unexpectedly in February.

Retail sales dropped 0.3 percent on a monthly basis in February, in contrast to a 1.1 percent rise in January and confounding expectations for an increase of 0.2 percent.

The pound fell against its major opponents in the previous session as the spread of coronavirus raised concerns about a global recession.

The pound climbed to 0.9136 against the euro, from a low of 0.9239 seen at 7:15 pm ET. The pound had ended yesterday’s trading session at 0.9150 against the euro. The pound is seen finding resistance around the 0.88 mark.

Survey data from market research group GfK showed that German consumer confidence is set to decline sharply to the lowest in more than a decade in April as the increase in the number of coronavirus infection cases and the accompanying measures made consumers to take cautious approach.

The forward-looking consumer confidence index fell to 2.7 from 8.3 in March. The score was forecast to fall moderately to 7.7 from March’s initially estimated value of 9.8.

The pound rose back to 131.71 against the yen, up from a low of 130.54 set at 7:15 pm ET. The pair was valued at 132.12 when it ended trading on Wednesday. Next key resistance for the pound is likely seen around the 141.00 level.

After touching 1.1637 against the franc, the pound held steady in subsequent deals. At Wednesday’s close, the pair was worth 1.1608. The pound is likely to face resistance around the 1.26 region, if it gains again.

The pound rallied to an 8-day high of 1.2031 versus the greenback amid soaring unemployment claims in the U.S. The pair had finished Wednesday’s deals at 1.1879. Should the pound strengthens further, it is likely to test resistance around the 1.29 region.

Data from the Labor Department showed a record spike in first-time claims for unemployment benefits in the week ended March 21.

The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week’s revised level of 282,000.

The material has been provided by InstaForex Company – www.instaforex.com