Mervyn King managed to meet expectations in a perfect way – so perfect, that the Pound hardly moved, a rarity. It left the Pound in its low position towards tomorrow’s big event.
The Bank of England left the interest rate unchanged at 0.5%, the historic low. This rate has been in place since March 2009. No change and no surprise there.
Also the Asset Purchasing Facility, also known as the Quantitative Easing program. The program was left 200 billion pounds, unchanged since November. The Bank has spent (or printed) 5 billion pounds since the last rate decision in December, and has 7 billion pounds left. They estimate that this will be drained until the next rate decision at the beginning of February.
GBP/USD was almost unchanged at 1.59 to 1.5910. Usually the Pound shakes on the monthly rate decision. This time, it was a perfect non-event. Contrary to many currencies, the Pound didn’t gain against the dollar this week. The Pound lost 200 pips so far this week – so far in 2010.
At the beginning of the week, the line of 1.6260, mentioned in the British Pound forecast, served as an excellent resistance line. The fall began after the Pound failed to break this line. It’s now trading between this line and a crucial support line.
Towards tomorrow’s Non-Farm Payrolls in the US, the Pound isn’t well positioned. Although it’s about 200 pips above the all-important support line of 1.5720, past experience tells us that this can be erased quite quickly.
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