Pound Advances Ahead Of Bank Of England Decision
December 16 2021 - 1:14AM
RTTF2
The pound appreciated against its major counterparts in the
European session on Thursday, ahead of the Bank of England's
monetary policy decision that is expected to hold rate steady due
to economic risks from the omicron virus variant.
Economists expect the BoE to keep interest rate unchanged at a
record low of 0.10 percent and the asset purchase programme at GBP
875 billion when it announces decision at 7 am ET.
Wednesday's hot inflation data raised expectations for a rate
hike from the Bank of England in February 2022.
With the Omicron variant spreading at a faster rate, policy
makers are unlikely to take imminent move towards raising
rates.
European stocks rose as investors reacted positively to the
Federal Reserve's decision to accelerate tapering of the asset
purchase program to curb inflation.
The Fed on Wednesday announced a faster tapering of asset
purchases and signaled three interest rate hikes in 2022.
The central bank doubled the pace of tapering of bond purchases
to $30 billion a month and would wind down the programme in
March.
Fed Chair Jerome Powell said that the policy change came in the
wake of higher inflation and faster progress in the labor
market.
The pound climbed to near a 2-week high of 1.3303 against the
greenback, from a low of 1.3241 hit at 12:45 am ET. The pound is
seen finding resistance around the 1.37 mark.
The pound firmed to more than 2-week highs of 151.82 against the
yen and 1.2296 against the franc, following its early lows of
151.09 and 1.2231, respectively. The pound is likely to face
resistance around 153 against the yen and 1.24 against the
franc.
The pound edged higher to 0.8501 against the euro, after falling
to a session's low of 0.8528 at 2:45 am ET. Next immediate
resistance for the pound is seen around the 0.84 level.
Looking ahead, the Bank of England's monetary policy
announcement is due at 7:00 am ET. The Monetary Policy Committee is
widely expected to hold the key rate at a record low of 0.10
percent and the quantitative easing programme at GBP 875
billion.
The European Central Bank will announce interest rate decision
at 7:45 am ET. The ECB is expected to hold its main refi rate at a
record low zero percent and the deposit rate at -0.50 percent.
U.S. weekly jobless claims for the week ended December 11,
industrial production, housing starts and building permits, all for
November, will be released in the New York session.
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