BoE refuses to give in to stimulus pressure

BoE refuses to give in to stimulus pressure

Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 10th of May. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • BoE decision on stimulus, rate to remain unchanged
  • G7 finance ministers to discuss banking reforms
  • Euro gives in to selling pressure on weak growth forecasts
  • Greenback continues rally against all peers
  • USD/JPY breaches 100.00, Nikkei prints fresh 5-year high

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1833

GBP/USD – 1.5402

GBP/CHF – 1.4716

GBP/CAD – 1.5538

GBP/AUD – 1.5329

GBP/ZAR – 13.9360

GBP/JPY – 155.9190

GBP/HKD – 11.9525  

GBP/NZD – 1.8456

GBP/SEK – 10.1192

Mid-market rates as of 2013-05-10 09:39 UTC

 

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Key releases in the next 24 hours that may affect currency date:

 

Australia: No Data

Europe: EUR ECB Announces 3-Year LTRO Repayment

United Kingdom: GBP Construction Output (YoY) (MAR), GBP Visible Trade Balance (Pounds) (MAR), GBP G7 Finance Ministers, Central Bank Chiefs, Meet in UK

New Zealand: No Data

United States of America: USD Monthly Budget Statement (APR)

China: CNY New Yuan Loans (APR)

Canada: Full Time Employment Change (APR), CAD Unemployment Rate (APR), CAD Net Change in Employment (APR)

Japan: No Data

 

BoE decision on stimulus, rate to remain unchanged

The Bank of England yesterday decided to keep its stimulus programme unchanged putting easing of fiscal conditions on hold. Interest rates were also capped at 0.5% as before. This was a decision that was expected by most. It is expected that BoE’s new governor Mark Carney will assume his post in July and there will be little or no policy changes until this date. The first quarter UK GDP figures posted growth of 0.3% and this is being cited by many as a reason for BoE to not go ahead with a new stimulus plan for the economy.

UK’s Industrial and Manufacturing data released yesterday also beat expectations. Following this, the sterling registered gains against most of its peers

G7 finance ministers to discuss banking reforms

G7 finance ministers and central bank chiefs are due to meet today in the UK to discuss ways of stimulating growth, following difference in opinion between Europe and the US on the pace of implementing austerity measures. The US supports boosting demand and employment but doesn’t believe further stimulus measures will solve this problem while Europe believes otherwise. UK Chancellor Osbourne released a statement earlier on saying that this meeting was an opportunity to consider the extent to which further monetary easing programmes can be carried out to support economic recovery in the Eurozone.

Euro gives in to selling pressure on weak growth forecasts

Following the release of its monthly report by the European Central Bank which saw the ECB lower its growth forecasts for the year to -0.4%, the Euro failed to perform yesterday. Selling pressure on the euro pushed the Pound to euro exchange rate up to as much as 1.1855.

Greenback continues rally against all peers

The USD advanced against all its peers and traded higher on Thursday. This momentum was fuelled by rising US yields, improved weekly employment figures weekly basis as well as hopes of Fed’s go ahead for a quantitative easing programme. USD/JPY pair shot up above the 100.00 level easily yesterday and ended its rally at 102.29.

USD/JPY breaches 100.00, Nikkei prints fresh 5-year high

Japanese Nikkei rallied ahead to new highs following the USD/JPY boost at over 100.00.  The Asian session saw consolidation of recent USD gains to end the week as the Yen sold out owing to Nikkei’s continued advance at above the 14600 points figure as well as higher levels of foreign bond purchases from Japan than observed previously.

 

 

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