Pound Climbs As BoE Carney Says Bank's Next Move Is Raising Rates
March 27 2015 - 9:06AM
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The pound drifted higher against its major rivals in European
deals on Friday, after the Bank of England governor Mark Carney
told that the next move in interest rates would be an increase and
not a cut, even as the U.K. is experiencing record low
inflation.
"We're still in a position where our message is... that the next
move in interest rates is going to be up," Carney said during a
panel discussion at a Bundesbank conference in Frankfurt.
In a speech at Imperial College Business School in London, the
BoE deputy governor Ben Broadbent said that low inflation in the UK
is likely to be temporary, and it "is positive, not negative, for
demand and output."
"Base effects will naturally give a big positive impetus to
annual inflation in early 2016," he said.
European markets advanced, after Germany's import prices
declined at a slower-than-expected pace in February, and optimism
emerged that conflict in Yemen would have little effect on oil
supplies even as concerns remained about the situation.
In economic front, U.K. house price growth softened for the
seventh consecutive month in March, data from the Nationwide
Building Society showed.
House prices advanced 5.1 percent year-on-year in March, slower
than February's 5.7 percent increase. The annual growth was also
slower than a 5.3 percent rise forecast by economists.
The pound ended Thursday's trading on a mixed note. Although
upbeat retail sales data gave some support to the pound-dollar
pair, that was short lived and it declined at the end of Thursday's
trading.
The pound appreciated to 1.4913 against the greenback, up by 0.8
percent from an early weekly low of 1.4796. The next possible
resistance for the pound-greenback pair may be located around the
1.50 zone.
The pound added 0.8 percent to hit a 3-day high of 1.4403
against the franc, compared to 1.4294 hit at Thursday's New York
session close. If the pound-franc pair extends rise, 1.46 is likely
seen as its next resistance level.
The pound spiked up to a 4-day high of 0.7265 against the euro,
a 0.8 percent rise from yesterday's closing value of 0.7326. On the
upside, the pound may find resistance around the 0.72 mark.
The pound advanced to a 2-day high of 177.92 against the
Japanese yen, following a decline to 176.69 at 5:30 am ET.
Continuation of the pound's uptrend may lead it to a resistance
surrounding the 180.00 area.
Looking ahead, U.S. final fourth quarter GDP data and
Reuters/University of Michigan's final consumer sentiment index for
March are due in the New York session.
At 3:35 pm ET, U.S. Federal Reserve Chair Janet Yellen is
expected to speak about monetary policy at the Federal Reserve Bank
Conference titled "The New Normal for Monetary Policy" at San
Fransisco.
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