The pound recouped its early losses against its major rivals in European trading on Tuesday, as European markets stabilized following a recovery in oil prices, and the Bank of England Governor Mark Carney sounded caution over the possibility of U.K. exiting the European Union.
Crude oil prices steadied near $30 a barrel on reports that OPEC may finally curb production to alleviate the global supply glut.
Kuwait’s OPEC Governor Nawal al-Fuzaia blamed non-OPEC rivals such as the US and Canada for not doing enough to boost prices by limiting energy supplies.
In his testimony before the Treasury Select Committee in London, Carney told that the Britain’s huge current account deficit might rise further, due to fragile global general environment and looming EU referendum.
“The global general environment has become much more febrile, much more volatile, and relying on the kindness of strangers is not optimal in that kind of environment, and that’s what is the case when you’re running a 4, 4-1/2 percent (of GDP) current account deficit,” Carney told lawmakers.
“And secondly, the possibility of a risk premia being attached to UK assets, because of certain developments, exists and that plays into the riskiness of the situation,” he added.
The currency was lower in Asian trading, due to the weakening of crude oil prices.
The pound was trading at 1.4273 against the greenback and 169.09 against the yen, off its early 5-day lows of 1.4173 and 166.98, respectively. The pound is likely to challenge resistance around 1.44 against the greenback and 170.00 against the yen.
The pound appreciated to a 4-day high 1.4526 against the franc, coming off from its European session’s 4-day low of 1.4355. On the upside, the pound may target resistance near the 1.465 mark.
Figures from the Federal Customs Administration showed that Switzerland’s trade surplus set a new record high in 2015, amid modest declines in both exports and imports.
The foreign trade surplus rose to CHF 36.61 billion from EUR 29.75 billion in the previous year. Exports fell 0.7 percent and imports dropped 0.5 percent.
The pound that fell to a 5-day low of 0.7664 versus the euro in previous trading rebounded, trading at 0.7587. The next possible resistance for the pound is seen around the 0.745 region.
Looking ahead, Markit’s flash U.S. service sector PMI report, U.S. consumer confidence index and U.S. Richmond Fed manufacturing index, all for January, are due shortly.
The material has been provided by InstaForex Company – www.instaforex.com