The shocking results of the Central Bank of England (BOE) policy meeting; and Europe (ECB) has lifted the pound and euro higher and pushed for a plunge in US dollar trade.
The BOE met market expectations to raise the rate by 25 basis points to 0.50% with a unanimous decision, besides also discussing a reduction in bond purchases.
Even so, the reaction displayed by the pound currency was insignificant as it was indeed already anticipated at first and some were expecting a rate hike of 50 basis points. In the Asian session, the pound traded strong at around 1.3600 against the USD.
This provides an opportunity for the euro to excel at a 3 -week high, although no interest rate changes or bond purchases were decided at the ECB meeting.
Still, a hawkish mixed statement from President Christine Lagarde about her concerns over inflation that is likely to remain high for longer than previously expected, has supported the euro.
This is in contrast to his earlier statement which saw inflationary pressures only temporary. According to ECB sources, there is a probability that the central bank may raise rates by the end of the year.
Meanwhile, the US dollar plunged to a nearly two -week low, bringing the dollar index to trade around 95.27 against a basket of major currencies.
Investors ’focus is now on the publication of the US NFP jobs report in the New York session which is expected to show little weakness in January compared to the previous month.
