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Forex News: Pound Bounces Off As BoE Expands QE Program

Pound Bounces Off As BoE Expands QE Program

06/18/2020 - 08:10:00 (RTTNews)

(RTTNews) - The pound trimmed its early losses against its major counterparts in the European session on Thursday, after the Bank of England left its record low interest rate unchanged and boosted asset purchase program to deal with the economic fallout from the outbreak.

The monetary policy committee headed by Andrew Bailey, decided to lift the asset purchase programme by GBP 100 billion to GBP 745 billion.

The nine-member committee unanimously decided to hold the interest rate at 0.10 percent, as widely expected.

Policymakers said they are ready to take further action as required to support the economy and ensure a sustained return of inflation to the 2 percent target.

The currency fell against its major rivals in the Asian session as investors expected the Bank of England to increase asset purchases by at least GBP 100 billion to further boost liquidity.

The pound recovered to 1.2549 against the greenback, after having declined to a 3-day low of 1.2475 at 6:30 am ET. The pound-greenback pair had finished yesterday's trading session at 1.2556. The pound is seen finding resistance around the 1.29 mark.

The pound bounced off to 134.28 against the yen, after falling to 133.54 at 6:30 am ET, which was its lowest level since June 15. The pair was worth 134.35 when it ended deals on Wednesday. Next key resistance for the pound is likely seen around the 137.00 level.

The pound reversed from an early weekly low of 1.1859 against franc, with the pair trading at 1.1903. The pair had closed Wednesday's deals at 1.1910. The pound is likely to face resistance around the 1.21 region, if it gains again.

Switzerland's central bank kept its expansionary monetary policy stance as it expects the economy to contract the most in over five decades and inflation to remain more negative than forecast earlier, this year due to the impact of the coronavirus, or Covid-19, and the lockdown restrictions imposed to slow the pandemic.

The Swiss National Bank left the key interest rate unchanged at -0.75 percent, in line with economists' expectations, and said it remains willing to intervene more strongly in the foreign exchange market due to the high valuation for the Swiss franc.

Following a 3-day drop to 0.9013 at 6:30 am ET, the pound turned slightly higher against the euro and was trading at 0.8969. At Wednesday's close, the pair was valued at 0.8954. Should the pound strengthens further, it is likely to test resistance around the 0.88 region.

Looking ahead, Canada new housing price index for May and wholesale sales for April and U.S. weekly jobless claims for the week ended June 13 are due in the New York session.

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