The pound climbed against the other major currencies in early European deals on Wednesday, after the Bank of England’s minutes showed that policymakers voted unanimously to maintain its monetary policy stance at the May meeting, while expecting improvement in economic growth this quarter.
The Monetary Policy Committee voted 9-0 to hold the key interest rate at a record low of 0.50 percent and asset purchase programme at GBP 375 billion.
For two members, the immediate policy decision remained finely balanced between voting to hold or raise the bank Rate.
“While there was a range of views over the most likely future path for Bank Rate, all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period,” the minutes said.
Inflation is expected to pick up notably towards the end of the year. The committee said it would seek to set monetary policy so that it would be likely that inflation would return to the 2 percent target within two years
However, the currency’s gains were limited by falling European stocks. Persistent worries over Greece’s aid as well as caution ahead of Federal Reserve’s minutes of April meeting dragged the stocks down.
On Tuesday, the pound traded in a negative territory after data showed that U.K. dipped into deflation in April. It lost 0.90 percent against the greenback and 0.32 against the yen yesterday.
The pound was trading mixed in Asian deals. While it held steady against the franc, it advanced against the euro and against the yen. Against the greenback, the pound fell.
In European trading, the pound recovered to 1.5534 against the greenback and 187.90 against the yen, from its previous lows of 1.5471 and 187.04, respectively. If the pound continues its rise, it may find resistance around 1.57 against the greenback and 190.00 against the yen.
The pound edged up to 1.4571 against the franc, compared to 1.4529 hit at Tuesday’s close. The next possible upside target for the pound-franc pair is seen around the 1.47 mark.
The pound hovered at early weekly high of 0.7144 against the euro. This may be compared to Tuesday’s closing value of 0.7181. On the upside, 0.70 is seen as the next possible resistance level for the pound.
Looking ahead, the Federal Reserve’s minutes of its April 28-29 meeting is due at 2:00 pm ET.
The material has been provided by InstaForex Company – www.instaforex.com