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Forex News: Pound Spikes Up On Stimulus Optimism

Pound Spikes Up On Stimulus Optimism

03/20/2020 - 07:43:00 (RTTNews)

(RTTNews) - The pound strengthened against its major counterparts in the European session on Friday, as stabilization in global markets and the Bank of England's fresh stimulus measures underpinned investor sentiment. In an attempt to boost the economy from the impact of the coronavirus, the BoE cut interest rate to a fresh record low of 0.1 percent from 0.25 percent on Thursday.

The central bank also ramped up its quantitative easing programme by £200 billion to £645 billion.

The BoE decision came against the backdrop of massive stimulus measures announced by global central banks and governments to ease the economic impact of the coronavirus pandemic.

The U.S. Federal Reserve said it would establish temporary swap lines with other nine central banks as part of coordinated action to improve liquidity in the financial markets.

China reported no new domestic coronavirus cases for the second consecutive day, but there were 39 newly confirmed COVID-19 cases on the Chinese mainland, all of which were imported.

Data from the Office for National Statistics showed that the UK budget deficit narrowed in February.

Public sector net borrowing excluding banks decreased to EUR 0.3 billion from EUR 0.6 billion in February.

The pound climbed to a 2-day high of 1.1879 versus the dollar, from a low of 1.1410 seen at 6:15 pm ET. The pound is seen finding resistance around the 1.22 area.

The pound spiked up to a 3-day high of 130.52 versus the yen, after falling to 126.40 at 6:15 pm ET. Next key resistance for the pound is seen around the 132.00 area.

The pound firmed to a 2-day high of 1.1614 against the franc, following a decline to 1.1272 at 6:15 pm ET. If the pound rises further, 1.24 is possibly seen as its next resistance level.

The pound was up at a 2-day high of 0.9080 against the euro, rebounding from a low of 0.9337 set at 6:15 pm ET. The currency is likely to locate resistance around the 0.88 level.

Data from the European Central Bank showed that the euro area current account surplus increased in January on primary income and services trade.

The current account surplus rose to EUR 35 billion in January from EUR 33 billion in December. This was also slightly above last year's surplus of EUR 34 billion.

Looking ahead, Canada retail sales for January and U.S. existing home sales for February are set for release in the New York session.

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