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Forex News: Dollar Drops Against British Pound After BoE Announcement

Dollar Drops Against British Pound After BoE Announcement

06/21/2018 - 14:21:00 (RTTNews)

(RTTNews) - The dollar is losing ground against all of its major rivals Thursday afternoon, but it losses are more pronounced against the British pound. The pound rallied after today's policy statement from the Bank of England.

Bank of England's rate-setting body witnessed a growing divide at the June meeting, after its chief economist Andrew Haldane joined the hawks seeking an interest rate hike. Policymakers also set out new guidance on when to consider reducing the quantitative easing programme.

Six members of the Monetary Policy Committee including Governor Mark Carney voted to maintain the benchmark rate at 0.50 percent, while three members preferred a quarter-point rate hike, the bank said in a statement on Thursday. All nine members voted to maintain quantitative easing at GBP 435 billion.

The MPC said it intends not to reduce the current stock of purchased assets until Bank Rate reaches around 1.5 percent compared to the previous guidance of around 2 percent. Any reduction in the stock of purchased assets will be conducted at a gradual and predictable pace, the bank said.

The buck climbed to an early high of $1.1506 against the pound sterling Thursday, but has since retreated to around $1.3260.

The UK budget deficit reached its lowest May level since 2005, figures from the Office for National Statistics showed Thursday.

Public sector net borrowing, excluding public sector banks, decreased by GBP 2.0 billion from last year to GBP 5.0 billion in May. This was the lowest May net borrowing since 2005 and below the expected level of GBP 6.3 billion.

First-time claims for U.S. unemployment benefits edged lower in the week ended June 16th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims dipped to 218,000, a decrease of 3,000 from the previous week's revised level of 221,000.

Economists had expected jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.

A report released by the Federal Reserve Bank of Philadelphia on Thursday showed a much bigger than expected slowdown in the pace of growth in regional manufacturing activity in the month of June.

The Philly Fed said its index for current general activity slumped to 19.9 in June from 34.4 in May. While a positive reading still indicates growth in regional manufacturing activity, the index had been expected to dip to 29.0.

With improvements in a majority of components partly offset by declines in leading indicators of labor markets and residential construction, the Conference Board released a report on Thursday showing a smaller than expected increase by its index of leading U.S. economic indicators in the month of May.

The Conference Board said its leading economic index edged up by 0.2 percent in May after climbing by 0.4 percent in April. Economists had expected the index to rise by 0.3 percent.

The dollar rose to an early high of $1.1506 against the Euro Thursday, but has since pulled back to around $1.1620.

France's manufacturing confidence remained stable in June, survey data from the statistical office Insee showed Thursday. The manufacturing sentiment index held steady at 110 in June. The score was forecast to fall to 108 in June from May's initially estimated value of 109.

The greenback reached an early high of Y110.756 against the Japanese Yen Thursday, but has since dropped to around Y109.925.

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