Pound Weakens As BoE Vows Stimulus To Ease Virus Impact
02 März 2020 - 8:47AM
RTTF2
The pound drifted lower against its major opponents during the
European session on Monday, as the Bank of England vowed to take
necessary steps to protect the economy from the virus outbreak.
The BoE promised that it would ensure financial and monetary
stability of the economy in the wake of the coronavirus
outbreak.
The Bank would monitor developments and is evaluating its
consequences on the global and UK economies and financial systems,
according to a spokesperson of the bank.
This followed indications from policy makers of the Bank of
Japan and the Federal Reserve to act to support their
economies.
The U.S. Federal Reserve is expected to cut interest rates when
it meets on March 18.
In a rare emergency statement, Bank of Japan Governor Haruhiko
Kuroda said the central bank would take necessary steps to help
protect markets from the impact of the coronavirus.
Survey data from IHS Markit showed that the UK manufacturing
sector expanded at the fastest pace in ten months in February as
domestic demand continued to recover on the back of reduced
political uncertainty.
The IHS Markit/Chartered Institute of Procurement & Supply
Purchasing Managers' Index rose to 51.7 in February from 50.0 in
January. However, this was below the earlier flash estimate of
51.9.
Data from the Bank of England showed that mortgage approvals for
house purchase increased to the highest level in nearly four years
in January.
The mortgage approvals rose to 70,888 in January from 67,930 in
December. This was the highest since February 2016 and above
economists' forecast of 68,000.
The pound declined to 1.2752 against the greenback, from a high
of 1.2851 set at 1:30 am ET. If the pound drops again, 1.25 is
likely seen as its next support level.
Extending early decline, the pound touched 137.15 versus the
yen, its lowest level since October 15, 2019. The next likely
support for the pound is located around the 135.00 level.
Bank of Japan Governor Haruhiko Kuroda said the bank will ensure
stability in the financial markets via asset purchases.
"The Bank of Japan will closely monitor future developments, and
will strive to provide ample liquidity and ensure stability in
financial markets through appropriate market operations and asset
purchases," he said in a statement.
The pound fell the most since October 10, 2019 against the
franc, at 1.2223. The pound is likely to face support near the 1.20
mark.
The pound depreciated to a 4-1/2-month low of 0.8704 against the
euro, from Friday's closing value of 0.8599. Further decline in the
pound may find support near the 0.90 mark.
Final survey data from IHS Markit showed that Eurozone
manufacturing activity contracted only marginally and at the
slowest pace for the past year in February.
The factory Purchasing Managers' Index rose to 49.2 in February
from 47.9 in January. This was slightly above the flash score of
49.1.
Looking ahead, U.S. ISM manufacturing index for February and
construction spending for January are set for release in the New
York session.
Sterling vs Yen (FX:GBPJPY)
Forex Chart
Von Mär 2024 bis Apr 2024
Sterling vs Yen (FX:GBPJPY)
Forex Chart
Von Apr 2023 bis Apr 2024