Euro continues to gain against the Dollar and Pound
The euro gained against the dollar and sterling on Wednesday after Moody’s affirmed Spain’s rating was not cut to ‘junk’ status. However, the BoE minutes and Unemployment figure may boost sterling later in the day.
The BoE minutes have indicated that policy-makers are split over the decision whether they are likely to need for more QE, and if it will help the economy. However nine members of the Bank’s Monetary Policy Committee voted unanimously to maintain the quantitative easing asset purchases at a total of £375bn and to keep interest rates at their record low of 0.5pc. But these purchases will be complete by the time of the Monetary Policy Committee’s meeting next month, and October’s minutes show the nine policy-makers continue to disagree on whether more will be needed.
Meanwhile, UK Jobless Claims performed better than expectations. The UK jobless claim fell by 50,000 in three months to 2.53 million in the three months to August against the expectation of unchanged employment figure with declines in manufacturing- and service-sector employment telegraphed in September’s PMI reports.
Cable traded in tandem with EUR/USD as risk appetite picked up after the FT reported that Spanish government is prepared to make a rescue request (via credit line), but is holding fire for clarity on the possible fallout on other Eurozone states. UK inflation data came in alongside expectations on both the consumer and producer inflation measures, with yearly CPI at it’s lowest since November 2009 at 2.2%, with the slowdown primarily due to energy prices, which may be only a temporary effect due to British Gas and Npower’s decisions to raise their energy prices last week. In terms of technical levels, supports are seen at 1.6057 and then at 1.6015. On the other hand, resistance levels are seen at 1.6220 and then 1.6227.
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