Pound Advances After BoE Holds Fire On Rate

The pound climbed against its most major opponents in the European session on Thursday, after the policymakers of the Bank of England unanimously decided to maintain interest rates and quantitative easing after a quarter point rate hike in August.

The Monetary Policy Committee or MPC, led by Governor Mark Carney, voted to keep the key rate unchanged at 0.75 percent. The MPC also unanimously decided to maintain the quantitative easing through asset purchases at GBP 435 billion.

If the economy would continue to develop broadly in line with the August Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2 percent target, Policymakers said.

The MPC reiterated that any future increases in Bank Rate were likely to be at a gradual pace and to a limited extent.

Data from the Royal Institute of Chartered Surveyors showed that U.K. house price balance dropped in August largely due to the weakness in London.

The national house price balance slid to 2 percent in August from 4 percent in July.

The pound declined against its major counterparts in the Asian session, with the exception of the yen.

The pound appreciated 0.4 percent to 0.8892 against the euro, from a low of 0.8924 hit at 2:30 am ET. The pair was valued at 0.8909 when it closed deals on Wednesday. The pound is seen finding resistance around the 0.87 mark.

Final data from Destatis showed that Germany's consumer price inflation held steady, as initially estimated in August.

Consumer price inflation remained stable at 2 percent in August, in line with the estimate published on August 30. The rate reached the 2 percent mark for the fourth consecutive month.

The pound added 0.3 percent to hit 1.3068 against the greenback, following a decline to 1.3026 at 2:00 am ET. At yesterday's close, the pair was worth 1.3044. Next key resistance for the pound is seen around the 1.32 region.

The U.K. currency climbed to a 2-day high of 145.76 against the yen, after falling to 145.01 at 5:30 pm ET. The pound was trading at 145.13 against the yen at Wednesday's close. The pound is poised to find resistance around the 148.5 area.

Data from the Bank of Japan showed that Japan producer prices were flat on month in August.

That was beneath expectations for an increase of 0.1 percent following the downwardly revised 0.4 percent gain in July.

On the flip side, the pound retraced its early gains against the franc with the pair trading at 1.2635. This is just few pips short of a session's low of 1.2629 seen at 2:45 am ET. The pound may possibly challenge support around the 1.23 level, if it falls further.

Looking ahead, at 7:45 am ET, the European Central Bank will deliver its monetary policy announcement. The main refi rate is expected to be held at a record low of zero percent and the deposit rate at -0.40 percent.

In the New York session, Canada new housing price index for July, U.S. CPI for August, weekly jobless claims for the week ended September 8 and monthly budget are scheduled for release.

At 10:00 am ET, Federal Reserve Governor Randal Quarles will testify on the implementation of the economic growth, regulatory relief, and the Consumer Protection Act before the Senate Banking Committee in Washington DC.