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Forex News: Pound Climbs After BoE McCafferty Proposes To Unwind

Pound Climbs After BoE McCafferty Proposes To Unwind QE Early

07/13/2017 - 06:44:00 (RTTNews)

(RTTNews) - The pound advanced against its major counterparts in the European session on Thursday, as Bank of England member Ian McCafferty struck a hawkish tone on monetary policy, saying the central bank should consider ending its asset purchase program sooner rather than later.

With the other banks thinking about normalizing balance sheet, it is appropriate for the BoE to review its policy of leaving QE unchanged until interest rates are close to 2 percent, McCafferty told the Times.

"I think it's a question that needs a bit of asking."

McCafferty also hinted that he would back for an interest rate hike in August as he did in June.

The U.K. economy could withstand higher rates, McCafferty said, citing strong jobs data and possibility of inflation overshoot.

Risk-on mood prevailed as Fed Chair Janet Yellen's comments about gradual policy tightening soothed fears of a central bank moving too fast.

Investors awaited further comments from her second day of testimony on Capitol Hill later today.

In its quarterly economic survey, the British Chambers of Commerce said that the U.K. economy grew at a subdued rate in the second quarter of 2017.

The balance of firms reporting increasing domestic sales in the manufacturing sector held steady at +20, while the balance reporting export sales rose marginally to +27 from +26.

The pound showed mixed trading in the Asian session. While the pound held steady against the franc and the euro, it rose against the yen and the greenback.

The pound climbed to a 6-day high of 1.2952 against the greenback, compared to 1.2884 hit late New York Wednesday. The pound may possibly target 1.32 as the next resistance level.

Reversing from an early low of 1.2420 against the Swiss franc, the pound hit a 2-day high of 1.2484. Continuation of the pound's uptrend may see it challenging resistance around the 1.27 region.

The pound firmed to a 6-day high of 0.8808 against the euro, after having fallen to 0.8874 at 1:30 am ET. The pound is seen finding resistance around the 0.86 area.

Latest figures from Destatis showed that Germany's consumer price inflation increased as initially estimated in June.

The consumer price index rose at a slightly faster pace of 1.6 percent year-over-year in June, following a 1.5 percent climb in May. That was in line with the flash data published on June 26.

The pound advanced to a 2-day high of 146.53 against the Japanese yen, from a low of 145.55 hit at 11:45 pm ET. If the pound extends rise, it may target 148.5 as its next resistance level.

Looking ahead, Canada new housing price index for May, U.S. PPI for June and U.S. weekly jobless claims for the week ended July 8 are slated for release In the New York session.

At 10:00 am ET, Federal Reserve Chair Janet Yellen testifies on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC.

At 11:30 am ET, Federal Reserve Bank of Chicago President Charles Evans is expected to speak about the economy and monetary policy at the Annual Rocky Mountain Economic Summit in Idaho, U.S.

At 1:00 pm ET, Federal Reserve Governor Lael Brainard is scheduled to speak about monetary policy at the National Bureau of Economic Research, in Massachusetts.

At 2:00 pm ET, U.S. Federal monthly budget statement is slated to publish.

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