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Forex News: Pound Slides Ahead Of BoE Decision

Pound Slides Ahead Of BoE Decision

11/02/2017 - 07:46:00 (RTTNews)

(RTTNews) - The pound weakened against its major rivals in the European session on Thursday, as investors brace for the Bank of England's interest rate decision, which is widely expected to raise the benchmark rate despite uncertain economic outlook.

The Monetary Policy Committee, headed by Governor Mark Carney, is forecast to raise the benchmark rate by 25 basis point to 0.50 percent.

The nine-member MPC is expected to maintain the asset purchase programme at GBP 435 billion.

The policy announcement is due at 8.00 am ET. The bank is also slated to release its latest Inflation Report along with the MPC decision.

A rate hike would help to combat inflation, running well above the bank's 2 percent target.

Investors focus on the statement for clues about the path of future rate hikes in the coming year.

In economic releases, survey data from IHS Markit showed that British construction activity signaled marginal upturn in October, driven by solid rise in residential building work.

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.

The currency held steady against its major rivals in the Asian session, with the exception of the greenback.

The pound dropped to a 2-day low of 1.3207 against the greenback, from a high of 1.3299 hit at 9:45 pm ET. If the pound falls further, 1.31 is possibly seen as its next support level.

The pound that finished yesterday's trading at 151.21 against the yen slipped to a 2-day low of 150.66. Continuation of the pound's downtrend may see it challenging support around the 149.00 mark.

Survey data from the Cabinet Office showed that Japan's consumer confidence improved unexpectedly in October to the highest level in just over four years.

The consumer confidence index climbed to 44.5 in October from 43.9 in September. Meanwhile, it was forecast to drop to 43.6.

The pound hit a 2-day low of 1.3194 against the Swiss franc, compared to 1.3286 hit late New York Wednesday. Further weakness may take the pound to a support around the 1.30 region.

The pound slipped to a 2-day low of 0.8824 against the euro, after having advanced to a 4-1/2-month peak of 0.8733 on Wednesday. The pound may possibly challenge support around the 0.90 area.

Final data from IHS Markit showed that Eurozone manufacturing PMI 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.

Looking ahead, U.S. weekly jobless claims for the week ended October 28 are set for release in the New York session.

At 8:30 am ET, Federal Reserve Governor Jerome Powell will deliver opening remarks at the Alternative Reference Rates Committee Roundtable hosted by the Federal Reserve Bank of New York, via satellite.

New York Fed President William Dudley will give closing remarks at the Alternative Reference Rates Committee Roundtable, hosted by the Federal Reserve Bank of New York at 12:20 pm ET.

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