The pound gained ground against its major opponents in the European session on Thursday, as the Bank of England left its interest rate and the quantitative easing programme unchanged and signaled that negative interest rate policy is not imminent.
The nine-member Monetary Policy Committee, headed by Governor Andrew Bailey, unanimously voted to hold the interest rate at 0.10 percent and the quantitative easing at GBP 895 billion in the latest policy meeting.
The MPC said it did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future. It concluded overall that it would be appropriate to start the preparations to provide the capability to do so if necessary, in the future.
The economy is expected to fall by around 4 percent in the first quarter of 2021, in contrast to expectations of a rise in the November Report.
According to latest Monetary Policy Report, GDP is projected to recover rapidly towards pre-COVID levels over 2021, as the vaccination programme is assumed to lead to an easing of COVID-related restrictions and people’s health concern.
Consumer price inflation is forecast to rise sharply towards the 2 percent target in the spring, as the reduction in VAT for certain services comes to an end and given developments in energy prices.
Inflation is projected to be close to 2 percent over the second and third years of the forecast period.
Survey results from IHS Markit showed that UK construction sector contracted marginally in January, ending a seven-month period of expansion.
The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index fell to 49.2 in January from 54.6 in December.
The Pound declined against its major trading partners in the Asian session as investors awaited the Bank of England’s monetary policy decision regarding its findings on negative interest rates.
The Pound added 0.7 percent to touch near a 1-year high of 0.8780 against the euro, after falling to a 3-day low of 0.8840 at 3:15 am ET. The Pound had ended yesterday’s trading session at 0.8818 against the euro. The Pound is likely to face resistance around the 0.86 region, if it gains again.
Data from Eurostat showed that Eurozone retail sales grew in December after a sharp fall in November.
Retail sales increased 2 percent month-on-month in December, in contrast to a fall of 5.7 percent in November. Sales were forecast to grow 1.6 percent.
The Pound approached near a one-year high of 1.2332 against the franc, climbing 0.8 percent from a 3-day low of 1.2235 set at 3:00 am ET. At Wednesday’s close, the pair was worth 1.2264. The Pound is seen locating resistance around the 1.25 mark.
Survey data from the State Secretariat for Economic Affairs showed that Swiss consumer sentiment deteriorated slightly in January.
The consumer sentiment index fell to -14.6 in January from -13.0 in the preceding quarter. The indicator remained below its long-term average of -5.0.
The Pound was up by 0.8 percent at 1.3681 against the dollar, following more than a 2-week decline to 1.3566 at 6:45 am ET. The pair had finished Wednesday’s deals at 1.3644. Immediate resistance for the Pound is likely seen around the 1.42 level.
After a 1-week drop to 142.84 at 3:15 am ET, the Pound gained 0.9 percent to near a one-year peak of 144.14 against the yen. The pair was valued at 143.30 when it ended trading on Wednesday. Should the Pound strengthen further, it is likely to test resistance around the 148.00 region.
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