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Forex News: Dollar Surged Against Pound After BoE Hikes Rates

Dollar Surged Against Pound After BoE Hikes Rates

11/02/2017 - 14:51:00 (RTTNews)

(RTTNews) - The dollar is turning in a mixed performance against its major rivals Thursday afternoon. The buck is down slightly against the Euro and the Japanese Yen, but has jumped against the British pound after today's decision from the Bank of England.

The Bank of England raised its key rate for the first time in a decade despite Brexit hurting the economy, as inflation sticks to upward trend on a weaker pound.

The Monetary Policy Committee, headed by Governor Mark Carney, decided to lift the benchmark rate by 25 basis points to 0.50 percent. This was the first rate hike since July 2007.

The MPC voted 7-2 to raise the interest rate. Policymakers voted unanimously to maintain the quantitative easing at GBP 435 billion.

The latest policy action has removed the emergency support announced in August 2016 in the wake of the Brexit vote.

The buck has surged to over a 3-week high of $1.3060 against the pound sterling this afternoon, from an early low of $1.3298.

British construction activity signaled marginal upturn in October, driven by solid rise in residential building work, survey data from IHS Markit showed Thursday. The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 50.8 in October from 48.1 in September. Economists had expected the index to improve to 48.5.

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday unexpectedly showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended October 28th.

The report said initial jobless claims edged down to 229,000, a decrease of 5,000 from the previous week's revised level of 234,000. The dip surprised economists, who had expected jobless claims to inch up to 235,000 from the 233,000 originally reported for the previous week.

With output jumping by much more than hours worked, the Labor Department released a report on Thursday showing a bigger than expected increase in U.S. labor productivity in the third quarter.

The report said labor productivity surged up by 3.0 percent in the third quarter after climbing by 1.5 percent in the second quarter. Economists had expected production to increase by 2.4 percent.

The Labor Department also said unit labor costs rose by 0.5 percent in the third quarter after edging up by 0.3 percent in the second quarter. The uptick in costs matched economist estimates.

The dollar has risen to around $1.1660 against the Euro Thursday afternoon, from an early low of $1.1687.

Eurozone manufacturing activity expanded at the fastest pace in more than six years in October, final data from IHS Markit showed Thursday. The manufacturing Purchasing Managers' Index rose to an 80-month high of 58.5 in October from 58.1 in September. Nonetheless, the reading was slightly below the initial estimate of 58.6.

German unemployment declined in October, data from the Federal Labor Agency revealed Thursday. The number of people out of work decreased by adjusted 11,000 to 2.495 million. Economists had forecast a decline of 10,000 in October.

The greenback slipped to a low of Y113.535 against the Japanese Yen Thursday, but has since bounced back to around Y114.025.

Japan's consumer confidence improved unexpectedly in October to the highest level in just over four years, survey data from the Cabinet Office revealed Thursday. The consumer confidence index climbed to 44.5 in October from 43.9 in September. Meanwhile, it was forecast to drop to 43.6.

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