Sterling finds support as BOE hold interest rates and vote against extending QE

Tom Tong11/May/2012Currency Updates

GBP

The Pound experienced a wave of support in the currency markets yesterday afternoon, reversing earlier losses against other leading currencies, following the Bank of England’s lunchtime announcement that it will be keeping British interest rates on hold and will not be extending the £325bn already allocated to it’s QE scheme. Better than anticipated UK Industrial Production and Manufacturing Production figures in the morning session also helped the Pound reach its strongest level against the Euro since November 2011.

EUR

The Euro put in a rather steady performance yesterday, in spite of an announcement from the Bank of France that it expected to see a 0% national growth in the first half of 2012. The Euro turned around the downward trend that has seen it lose value in the previous eight trading sessions. However, many FX traders reported that technical positioning rather than news flow was the main cause of this.

USD

Mixed data out from the Dollar yesterday included Ben Bernanke’s speech which highlighted the US banking system has strengthened since the financial crisis, making some loans more available, but mortgage lending will likely be slow to recover. The Dollar lost some ground against both the pound and the Euro yesterday. Investors scaled back on their safe-haven positions yesterday thanks to better-than-anticipated Australian unemployment data and a failure of Greece’s far-left Syriza bloc to form a new anti-bailout government in the troubled Hellenic state. The Dollar, however, did gain value against the Scandanavian basket of currencies as the problems in the single currency area are keeping risk takers at bay for now.

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Written by Tom Tong

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