European Session – Sterling steals spotlight and rallies on hawkish BOE inflation report, UK data
November 13, 2013 1:36 pm
Sterling took the spotlight today and was the best performing major currency after an upbeat Bank of England quarterly inflation report and improved UK jobs data.The BOE raised its growth forecast for the UK and BOE Governor Mark Carney in a press conference today said that he believes that the unemployment threshold of 7% could be reached by next year. Thus the central bank would be able to keep the benchmark interest rate unchanged at the record low 0.5% until the target is reached.
Today’s jobs data showed the ILO unemployment rate for the UK falling to 7.6% for the months of July to September, from 7.7% over the preceding three months. The claimant count change was much-better-than-expected, dropping 41,700 from 44,700 the previous month. Estimations were for a decline of 35,000.
The pound rallied against the dollar after the data at 9:30 am London time, hitting as high as 1.6001 from 1.5887, and moving off yesterday’s 2-month low of 1.5852. It ended the session at 1.5968, with a 0.5% gain. Against the euro, sterling gained 0.6%, causing the euro to fall to 0.8401 .
The euro fell against the dollar, but managed to remain supported above the key 1.34 handle. The sell-off in EURGBP weighed on the EURUSD, leading it to end the session with a 0.13% loss at 1.3417. EURJPY fell to 133.41, down 0.3%.
In terms of economic data out of the Eurozone, there was industrial production which fell 0.5% in September (month-over-month) from a prior 1.0% gain. Other data showed Spanish inflation was below an earlier reading which raises concern that deflation in the Euro-area could push the ECB to implement new policy easing measures.
Meanwhile, tapering expectations by the Federal Reserve are giving the US dollar strength. Against the yen, the dollar eased slightly from a 2-month high of 99.78 which was struck on Tuesday. The dollar slid 0.15% during the European session, to end at 99.42 yen.
Improving US economic data, especially Friday’s nonfarm payrolls report, are raising expectations that the Federal Reserve could begin scaling back stimulus sooner than expected, and possibly even by the next FOMC meeting in December.
Aside from tapering expectations, the new Fed Chair Janet Yellen’s confirmation hearing will be closely watched for any comments which could affect the dollar.
Sterling took the spotlight today and was the best performing major currency after an upbeat Bank of England quarterly inflation report and improved UK jobs data.The BOE raised its growth forecast for the UK and BOE Governor Mark Carney in a press conference today said that he believes that the unemployment threshold of 7% could be reached by next year. Thus the central bank would be able to keep the benchmark interest rate unchanged at the record low 0.5% until the target is reached.
Today’s jobs data showed the ILO unemployment rate for the UK falling to 7.6% for the months of July to September, from 7.7% over the preceding three months. The claimant count change was much-better-than-expected, dropping 41,700 from 44,700 the previous month. Estimations were for a decline of 35,000.
The pound rallied against the dollar after the data at 9:30 am London time, hitting as high as 1.6001 from 1.5887, and moving off yesterday’s 2-month low of 1.5852. It ended the session at 1.5968, with a 0.5% gain. Against the euro, sterling gained 0.6%, causing the euro to fall to 0.8401 .
The euro fell against the dollar, but managed to remain supported above the key 1.34 handle. The sell-off in EURGBP weighed on the EURUSD, leading it to end the session with a 0.13% loss at 1.3417. EURJPY fell to 133.41, down 0.3%.
In terms of economic data out of the Eurozone, there was industrial production which fell 0.5% in September (month-over-month) from a prior 1.0% gain. Other data showed Spanish inflation was below an earlier reading which raises concern that deflation in the Euro-area could push the ECB to implement new policy easing measures.
Meanwhile, tapering expectations by the Federal Reserve are giving the US dollar strength. Against the yen, the dollar eased slightly from a 2-month high of 99.78 which was struck on Tuesday. The dollar slid 0.15% during the European session, to end at 99.42 yen.
Improving US economic data, especially Friday’s nonfarm payrolls report, are raising expectations that the Federal Reserve could begin scaling back stimulus sooner than expected, and possibly even by the next FOMC meeting in December.
Aside from tapering expectations, the new Fed Chair Janet Yellen’s confirmation hearing will be closely watched for any comments which could affect the dollar.
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