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Forex News: Pound Advances Ahead Of Bank Of England Decision

Pound Advances Ahead Of Bank Of England Decision

12/16/2021 - 06:14:00 (RTTNews)

(RTTNews) - The pound appreciated against its major counterparts in the European session on Thursday, ahead of the Bank of England's monetary policy decision that is expected to hold rate steady due to economic risks from the omicron virus variant.

Economists expect the BoE to keep interest rate unchanged at a record low of 0.10 percent and the asset purchase programme at GBP 875 billion when it announces decision at 7 am ET.

Wednesday's hot inflation data raised expectations for a rate hike from the Bank of England in February 2022.

With the Omicron variant spreading at a faster rate, policy makers are unlikely to take imminent move towards raising rates.

European stocks rose as investors reacted positively to the Federal Reserve's decision to accelerate tapering of the asset purchase program to curb inflation.

The Fed on Wednesday announced a faster tapering of asset purchases and signaled three interest rate hikes in 2022.

The central bank doubled the pace of tapering of bond purchases to $30 billion a month and would wind down the programme in March.

Fed Chair Jerome Powell said that the policy change came in the wake of higher inflation and faster progress in the labor market.

The pound climbed to near a 2-week high of 1.3303 against the greenback, from a low of 1.3241 hit at 12:45 am ET. The pound is seen finding resistance around the 1.37 mark.

The pound firmed to more than 2-week highs of 151.82 against the yen and 1.2296 against the franc, following its early lows of 151.09 and 1.2231, respectively. The pound is likely to face resistance around 153 against the yen and 1.24 against the franc.

The pound edged higher to 0.8501 against the euro, after falling to a session's low of 0.8528 at 2:45 am ET. Next immediate resistance for the pound is seen around the 0.84 level.

Looking ahead, the Bank of England's monetary policy announcement is due at 7:00 am ET. The Monetary Policy Committee is widely expected to hold the key rate at a record low of 0.10 percent and the quantitative easing programme at GBP 875 billion.

The European Central Bank will announce interest rate decision at 7:45 am ET. The ECB is expected to hold its main refi rate at a record low zero percent and the deposit rate at -0.50 percent.

U.S. weekly jobless claims for the week ended December 11, industrial production, housing starts and building permits, all for November, will be released in the New York session.

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