Sterling Range-bound as Euro Weakens
|Published: ||9 Mar at 10 AM|
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The pound has had a mixed trading session over the last 24 hours closing yesterday relatively stable against the basket of major currencies following a poor showing earlier in the day.
RICS house price balance improved and the British Retail Consortium showed that shop inflation indicators accelerated. It’s likely that this data and the upcoming trade numbers will provide little meaningful change in direction as sterling traders have one eye firmly on tomorrow’s Bank of England Monetary Policy Committee announcement regarding interest rates.
The recently bullish euro has been quashed today as continued fears over the European debt crisis weigh in with uncertainty resurfacing over countries like Portugal and Spain, and their ability to keep up with the more buoyant countries.
The pound was steady against the dollar remained above the $1.6150 price. Dollar markets were generally firmer in yesterday’s trading, however if oil prices continue to ease it is likely the USD will stage a come back from its recent lows.
Against the higher-yielding currencies sterling continues to move upward but will its resolve will be tested later with the Royal Bank of New Zealand set to meet and announce its next wave of interest rates.
Forecasts by the central bank itself as well as Prime Minister Key’s vague request for a cut have fed market-based speculation for this particular meeting. Ahead of the decision (due at 20:00 GMT), the market is pricing in a 124 percent probability of a 25 basis point (bps) rate cut. That means a quarter-percent reduction is fully priced in and there is speculation of a 50 bps cut. The outlook from economists is even more contentious with a near equal mix of speculation for no change, a quarter-percent cut and a half-percent cut.
More on the Bank of England and Bank of New Zealand’s two key announcements will be reported on tomorrow.