Pound Trades Higher Amid Risk Appetite
March 15 2017 - 02:25AM
RTTF2
The pound traded higher against its major counterparts in the
early European session on Wednesday amid risk appetite, as oil
prices recovered and investors awaited the U.S. Federal Reserve's
interest rate decision later in the day on hopes of an increase in
benchmark rate.
Although a 25 basis-point rate hike is priced in, traders await
the Fed statement for further clarity on the bank's interest rate
plans for the rest the year.
The Fed Chairwoman Janet Yellen will hold a press conference at
2:30 pm ET, when she will give an update on the U.S. economy.
Oil prices rallied on industry data showing a surprise drawdown
in U.S. crude stockpiles. The American Petroleum Institute reported
a decline in crude inventories by 531,000 barrels of oil per day to
529.1 million barrels of oil per day in the week to March 10,
defying analysts' expectations for an increase of 3.7 million
barrels of oil per day.
In economic front, data from the Office for National Statistics
showed that the UK jobless rate fell to the lowest level since 1975
at the start of the year.
The ILO unemployment rate came in at 4.7 percent in three months
to January versus 5.1 percent seen a year earlier. It has not been
lower since June to August 1975. The expected rate was 4.8
percent.
At the same time, the employment rate was 74.6 percent, the
joint highest since comparable records began in 1971.
The Bank of England's monetary policy announcement is due on
Thursday, with economists expecting no major changes in policy
despite a recent upshot in inflation.
The pound has been trading slightly higher against its major
counterparts in the Asian session.
The pound spiked up to a 2-day high of 1.2359 against the Swiss
franc and held steady in the course of the trading session. The
pound-franc pair is likely to challenge resistance resistance
around the 1.28 zone.
The pound firmed to near a 2-week high of 140.60 against the yen
and held steady since then. If the pound extends advance, 142.00 is
possibly seen as its next resistance level.
Figures from the Ministry of Economy, Trade and Industry showed
that Japan's industrial production declined less than initially
estimated in January.
Industrial production fell 0.4 percent month-over-month in
January instead of a 0.8 percent drop estimated earlier. It was the
first decline in six months.
The pound strengthened to a 9-day high of 1.2255 against the
greenback and a 6-day high of 0.8664 against the euro, compared to
Tuesday's closing values of 1.2153 and 0.8724, respectively. The
pound moved sideways against these currencies in subsequent part of
the deals. On the upside, 1.24 and 0.85 are possibly seen as the
next resistance levels for the pound against the greenback and the
euro, respectively.
Looking ahead, New York Fed's empire manufacturing data for
March, U.S. consumer price index and retail sales for February,
NAHB housing market index for March and business inventories for
January, as well as Canada existing home sales for February are due
in the New York session.
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