RTTN: Pound Bounces Back Against Greenback, Euro And Franc Ahead Of BoE Rate Decision
(RTTNews) - Ahead of the interest rate announcement by the Bank of England, the British pound bounced back against its U.S., European and Swiss counterparts in European deals on Thursday. The pound thus recovered from a 2-day low against the euro and franc. On the other hand, the sterling extended its Asian session's downtrend against the Japanese yen.
Today, the Bank of England is expected to raise the size of its quantitative easing measures to GBP 225 billion to aid the ailing economy. Also, the central bank is set to maintain the key rate at a historic low. The announcement is due at 7.00 am ET.
At the end of its two-day rate setting meeting, the Monetary Policy Committee is widely expected to retain the official Bank Rate paid on commercial bank reserves at 0.5%. This has been the lowest rate since the central bank was established in 1694.
Economists expect the bank to announce an increase in the size of asset purchase scheme by GBP 50 billion following its current meeting. As on October 29, the central bank has purchased GBP 174.8 billion worth assets.
The British Chambers of Commerce urged the MPC to raise the QE measures immediately by at least GBP 200 billion, with the option of additional increases later on. David Kern, BCC's Chief Economist said, along with considering a negative interest rate on deposits held by commercial banks at the BoE, the MPC and the government need to consider other radical measures to boost lending.
The quantitative easing measures were first initiated on March 5 by launching GBP 75 billion asset purchase programme using central bank reserves. Later on, the measure was raised to GBP 125 billion on May 7 and then to GBP 175 billion on August 6.
Against the US dollar, the British pound gained ground after hitting a low of 1.6470 at 2:00 am ET Thursday. The pound-dollar pair is currently trading at 1.6544, compared to 1.6556 hit late New York Wednesday. The next upside target level for the pair is seen around 1.661.
U.K.'s sterling that closed Wednesday's North American session at 0.8980 against the European currency slipped to a 2-day low of 0.9002 at 1:50 am ET Thursday. Thereafter, the pound reversed its direction and is currently trading at 0.8976 against the euro with 0.892 seen as the next resistance level.
The Eurostat said in a report today that Eurozone retail sales declined 0.7% month-on-month in September, after falling 0.1% in August, revised from 0.2% drop estimated initially. Economists were looking for an increase of 0.2%.
