Pound Extends Rally Against Majors

Pound Extends Rally Against Majors




The pound extended its 2-day winning streak against its major rivals in early deals on Thursday as the market continued to mull yesterday's monetary policy meeting minutes by the Bank of England that signaled halting of asset purchase programme when the current round of QE ends in May.
Bank of England's Monetary Policy Committee (MPC) on Wednesday decided to maintain the size of the asset purchase programme through a split vote as one member called for an increase in stimulus, the minutes of the meeting showed today.
Eight members of the committee, including Governor Mervyn King, voted to retain the quantitative easing at GBP 325 billion. While Adam Posen gave up his call for more stimulus, David Miles continued to seek an increase in the asset purchase programme by GBP 25 billion to GBP 350 billion.
At the same time, the committee unanimously decided to maintain the interest rate at a historic low of 0.50 percent.
Traders also bought pound as safe haven as investors take a cautious view ahead of a long-term sovereign Spanish debt auction taking place later in the session. Spain aims to raise as much as 2.5 billion euros selling two- and 10-year bonds.
The pound jumped to a 2-week high of 131.14 against the yen around 3:25 am ET. The pound-yen pair is presently worth 130.90 with 131.90/132.0 seen as the next likely resistance level.
Japan posted a merchandise trade deficit of 82.55 billion yen in March, the Ministry of Finance said on today. The headline figure topped forecast for a shortfall of 223.2 billion yen following the downwardly revised 29.4 billion yen surplus in February, although the trade balance fell into the red for the fifth time in six months.
Exports were up 5.9 percent on year to 6.204 trillion yen, also blowing past expectations for an increase of 0.2 percent following the 2.7 percent contraction in the previous month.
Imports climbed an annual 10.5 percent to 6.286 trillion yen, climbing for the 27th consecutive month. That compares to forecasts for a gain of 7.0 percent after rising 9.2 percent a month earlier.
The pound touched 1.6080 against the dollar, its highest level since November 14. The next upside target for the cable is seen around the 1.61 level in the near-term.
The pound also rose to 0.8167 against the euro around 3:00 am ET, its strongest mark since August of 2010. The near-term resistance for the sterling is seen around the 0.8150 level.
The British currency climbed to a fresh multi-month high of 1.4726 against the Swiss franc around 3:20 am ET. The pound-franc pair is presently worth 1.4705 with 1.4765 seen as the next likely resistance level.
Looking ahead, Spanish and French bond auctions are expected to garner market attention in the upcoming trading hours.
The US weekly jobless claims for the weekended April 14, existing home sales and leading indicators data-both for March and Philadelphia Fed's manufacturing data for April are expected in the North American session.



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