The pound advanced further against its major rivals in European deals on Tuesday, as the Financial Policy Committee of the Bank of England unveiled plans that requires banks to hold more capital in an attempt to safe guard against bad loans.
The BoE’s financial policy committee increased the UK countercyclical capital buffer rate to 0.5 percent from zero percent of risk-weighted assets, taking into account of the current risk environment, according to record of the FPC meeting held on March 23.
Risks associated with domestic credit are no longer subdued, and global risks, which can also affect UK exposures indirectly, are heightened, the bank said.
The BoE said it would raise the UK countercyclical capital buffer rate to 1 percent gradually. This will increase transparency and sharpen the incentives of the buffer system.
The currency showed mixed trading in Asian deals. While the pound held steady against the yen and the euro, it declined against the greenback and the franc.
The pound appreciated to a weekly high of 0.7836 against the euro, compared to 0.7854 hit late New York Monday. The pound is seen finding resistance around the 0.77 zone.
Data from the European Central Bank showed that Eurozone money supply growth held steady in February and private sector credit expanded at a faster pace.
The broad monetary aggregate M3 climbed 5 percent year-on-year in February, the same rate as seen in January and in line with expectations.
The pound added 0.5 percent to 162.42 against the Japanese yen, its strongest since March 15. At yesterday’s close, the pair was worth 161.68. On the upside, the pound may locate resistance around the 164.00 zone.
Data from the Ministry of Internal Affairs and Communications showed that Japan’s unemployment rate came in at a seasonally adjusted 3.3 percent in February.
That was higher than forecasts for 3.2 percent, which would have been unchanged.
The pound that closed yesterday’s trading at 1.3877 against the Swiss franc spiked up to a 1-week high of 1.3937. The pound is poised to target resistance around the 1.41 area.
The pound climbed to a 1-week high of 1.4297 against the dollar, following a decline to 1.4194 at 3:00 am ET. Further uptrend may take the pound to a resistance around the 1.44 mark.
Looking ahead, Canada industrial product and raw materials price indexes for February, U.S. S&P/Case-Shiller home price index for January and U.S. consumer confidence index for March are due to be released in the New York session.
At 11:30 am ET, Yellen will deliver a speech titled “Economic Outlook and Monetary Policy” at the Economic Club of New York luncheon. Dudley will also deliver a speech at the event.
The material has been provided by InstaForex Company – www.instaforex.com