The pound strengthened against its major counterparts during the European session on Wednesday, following comments from the Bank of England chief economist Andy Haldane that the central bank might require to turn off the tap of its huge monetary stimulus in the wake of some pretty punchy pressures on prices.
Speaking to LBC radio, Haldane said that the “UK economy is going gang-busters” and it should not be overly dependent on “monetary medicine.”
“If both pay, and costs are picking up, inflation on the high street isn’t very far behind.”
“And that may mean that at some stage we need to start turning off the tap when it comes to the monetary policy support we have been providing over the period of the COVID crisis.”
Haldane cautioned that there are risks of inflation overshooting target for a bit longer than planned.
The pound firmed to a 2-day high of 1.4189 versus the dollar and a 5-day high of 155.32 against the yen, reversing from its prior lows of 1.4142 and 154.85, respectively. The pound is seen finding resistance around 1.43 versus the dollar and 160.00 against the yen.
The pound appreciated to 1.2719 against the franc, after a decline to 1.2679 in the previous session. Next key resistance for the pound is likely seen around the 1.30 level.
In contrast, the pound reversed from a 2-day high of 0.8589 against the euro and was worth 0.8607. If the pound slides further, 0.88 is likely seen as its next support level.
Data from Destatis showed that Germany’s exports growth eased more-than-expected in April and imports dropped for the first time in three months.
Exports rose only 0.3 percent month-on-month in April, after a 1.3 percent rise in March. Economists had forecast a monthly growth of 0.5 percent.
Looking ahead, at 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to hold at 0.25 percent.
U.S. wholesale inventories for April are due in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com