The pound moved up against its major trading partners in the European session on Thursday, after the Bank of England retained its interest rate and quantitative easing programme, but signaled a modest tightening of monetary policy depending upon improvement in the economy.
The Monetary Policy Committee unanimously decided to leave the key interest rate unchanged at 0.10 percent.
The central bank retained the existing stock of corporate bond purchases at GBP 20 billion and the government bond purchases at GBP 875 billion, taking the size of total quantitative easing to GBP 895 billion.
The MPC voted unanimously to retain corporate bond purchases, while one member sought to reduce government bond purchases by GBP 45 billion to GBP 830 billion.
Michael Saunders observed that with the existing policy stance, inflation was likely to remain above the 2 percent target two and three years ahead and the economic outlook warranted a reduction in the scale of monetary policy stimulus at this MPC meeting.
The committee judged that, should the economy evolve broadly in line with the central projections in the August Monetary Policy Report, some modest tightening of monetary policy over the forecast period was likely to be necessary to be consistent with meeting the inflation target sustainably in the medium term, the bank said in its monetary policy summary.
Survey results from IHS Markit showed that the recovery in UK construction output lost momentum in July with slower growth seen in all three main categories of work.
The Chartered Institute of Procurement & Supply construction Purchasing Managers’ Index fell to 58.7 in July from June’s 24-year high of 66.3. The reading was forecast to fall to 64.0.
The pound showed mixed performance against its major peers in the Asian session. While it held steady against the euro, it rose against the franc and the yen. Versus the greenback, it dropped.
The pound jumped to a 6-day high of 1.2641 against the franc, up by 0.5 percent from Wednesday’s closing value of 1.2582. Further rally in the currency may challenge resistance around the 1.30 level.
The pound bounced off 0.5 percent to 1.3946 against the greenback, after touching 1.3872, which was its lowest level since July 28. The pair had finished Wednesday’s deals at 1.3888. The pound may seek resistance around the 1.42 level.
The pound added 0.4 percent to hit a 3-day high of 152.70 against the yen. The pair was valued at 152.02 when it ended trading on Wednesday. Immediate resistance for the pound is likely seen around the 156 level.
The pound gained 0.3 percent against the euro, reaching a 4-month high of 0.8495. The pound had ended yesterday’s trading session at 0.8522 against the euro. Next near term resistance for the pound is likely seen around the 0.82 level.
Data from Destatis showed that Germany factory orders grew more than expected in June, underpinned by strong domestic demand.
Factory orders advanced 4.1 percent month-on-month in June, reversing a 3.2 percent fall in May.
The material has been provided by InstaForex Company – www.instaforex.com