Sterling held steady against the euro and bounced back from an 11-week low against the dollar on Thursday as a widely expected Bank of England decision to keep rates on hold played second fiddle to gyrations after US data. The pound fell as low as $1.8510 as the greenback rallied after a narrower than expected US trade deficit and lower than expected jobless claims. But sterling recovered to trade more than half a percent higher on the day by 1520 GMT as the dollar's gains proved short-lived.
"The market was already positioned for positive US news so you probably saw some profit taking," said Ian Stannard, foreign exchange strategist at BNP Paribas in London.
Against the euro sterling traded virtually flat at 68.92 pence as the single currency was also buffeted by dollar volatility.
No statement accompanied the Bank of England Monetary Policy Committee's decision to keep rates on hold for a sixth month in a row at 4.75 percent after five quarter percentage-point increases between November 2003 and August last year.
British Retail Consortium January data that showed UK shop prices fell at their sharpest annual pace in at least seven years adds to a recent run of mixed data keeping investors guessing as to future interest rate policy.
In recent weeks house prices have turned out stronger than expected and optimism has soared in the service sector, but consumer spending was very weak over the key Christmas shopping season and manufacturing has only narrowly escaped a recession.
Investors are now keenly awaiting the MPC's quarterly inflation report next Wednesday for interest rate clues.
Comments
Comments are closed.