RTTN:Pound Pares Gains Against Dollar And Yen; BoE Rate Decision In Focus
(RTTNews) - The pound erased some of its late Asian session gains against the currencies of the U.S. and Japan in early European deals on Thursday as caution prevailed ahead of the key rate decisions from both the Bank of England and the European Central Bank. Market participants are also waiting for the outcome of the Eurozone finance ministers meeting.
The Bank of England is widely expected to announce more quantitative easing today when policymakers meet for the second time this year. The central bank is expected to pump at least GBP 50 billion into the economy, which badly needs stimulus amid signs of slowing inflation.
The Monetary Policy Committee governed by Mervyn King is likely to raise the bond purchase programme to GBP 325 billion from GBP 275 billion. Also, the central bank is set to maintain interest rates at record low level of 0.50 percent.
The European Central Bank is set to announce its decision at 7.45 am ET. Economists widely expect policymakers to maintain the rate at 1.00 percent. ECB President Mario Draghi is set to hold a the regular post-decision press conference at 8.30 am ET.
Last month, the Governing Council led by ECB President Mario Draghi had decided to maintain the main refi rate at 1 percent that was in line with economists' expectations. The bank has never cut the rate below 1 percent. Last year, the central bank under former chief Jean-Claude Trichet hiked interest rates twice.
Elsewhere, the Eurozone finance ministers are set to discuss the Greek bailout again today after a seven hour long meeting between Greek Prime Minister Papademos and leaders of Pasok, New Democracy and the far-right Laos party ended Wednesday with creditors' demand to make EUR300 million ($397.87 million) cuts to state and private pensions reportedly remaining the main stumbling block.
In economic news, the U.K. industrial production grew 0.5 percent month-on-month in December, offsetting last month's 0.5 percent decrease, data from the Office for National Statistics showed today. Economists had expected only 0.2 percent growth. At the same time, manufacturing output grew 1 percent, faster than the 0.2 percent rise forecast by economists.
At the same time, the nation's trade gap narrowed more than expected in December to reach the smallest deficit since April 2003, data from the Office for National Statistics showed. The deficit on seasonally adjusted trade in goods and services was GBP 1.1 billion in December compared with the deficit of GBP 2.8 billion in November.
The pound that advanced to 1.5864 against the US dollar around 4:45 am ET depreciated by more than 0.2 percent to reach a low of 1.5829 after an hour. If the cable weakens further, it may re-test Asian session's 2-day low of 1.5795.
(RTTNews) - The pound also shed almost 30-pips to reach a low of 122.20 against the yen around 5:45 am ET from previous high of 122.46. The pound-yen pair is presently worth 122.25 with 122.0 seen as the next likely support level in the near-term.
Japanese consumer confidence improved unexpectedly in January, monthly survey data from the Cabinet Office showed today. The consumer sentiment index climbed to 40 from 38.9 a month ago. Economists were expecting the indicator to fall to 38.5.
The pound that slipped to a 9-day low of 1.4409 against the Swiss franc in Asian trading staged a brief reversal shortly after commencing the European session. However, the pair eased after gaining almost 40-pips and is presently hovering around the 1.4450 level.
Switzerland's consumer confidence improved modestly in January and surpassed economists' forecast, owing to improved expectations for the overall economic development, data from a survey by the State Secretariat for Economic Affairs (SECO) showed today.
The consumer confidence index moved up to -19 points in January from -24 points in October, when the previous survey was conducted. Economists expected the a reading of -22.
The pound trimmed some of its Asian session losses against the euro in early deals Thursday, hitting as high as 0.8375 before leveling off around 5:00 am ET. The pound is presently quoted at 0.8380 against the single currency, up from previous session's 10-day low of 0.8404.
Looking ahead, the U.S. customary weekly jobless claims for the weekended January 28 and the wholesale inventories data for December are slated for release in the New York session.
