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British pound dropped significantly against the dollar after message from the Bank of England

February 19, 2014, Wednesday, 09:38 GMT | 04:38 EST | 14:08 IST | 16:38 SGT
Contributed by Forex-Metal

Asian and European trading sessions:

Euro: The euro exchange rate rose slightly against the U.S. dollar. After the initial reaction to the mixed results of ZEW, the pair was able to gain momentum and growth in the area to recover the maximum values. Analysts said that in recent years to assess the current situation has become a good leading indicator of GDP. In this sense, today's sharp rise in this component was the good news for the economy, which increased the likelihood that in the first months of this year, it should gain momentum. Recall that the report showed that the index of sentiment in the business environment fell in February to the level of 55.7 points compared to 61.7 points in January. Experts expected that the value of this indicator decrease only to the level of 61.3 points. However, despite the decline, the index remained well above its historical average level of 24.5 points. In addition, the data showed that the rate that evaluates opinion on the current economic situation rose to 50 points in February from 41.2 in January, reaching its highest level since August 2011. Expectations were at 44 points. We also add that for the euro zone sentiment index fell in the business environment 4.8 points and reached the level of 68.5 points. Meanwhile, the index of the current situation in the euro zone improved by 8 points - to the level of 40.2 points. The EUR / USD pair rose to $ 1.3737 during the European session.

British Pound: Pound dropped significantly against the dollar after data showed that the UK inflation rate last month fell below the target value of the Bank of England, which is fixed for the first time in the last four years. The latter result confirms the message from the Bank of England, there is no reason to raise interest rates.

According to the report, consumer prices rose by 1.9 % per annum in January, compared with an increase of 2.0 % in December, while showing the weakest growth since November 2009. Economists had expected inflation to remain at 2.0 %. Add that up to December last year, the annual inflation rate exceeded the target of the Bank of England at the level of 2 % every month since December 2009 , undermining the purchasing power of households and making greater decline in living political issue ahead of elections next year. The main measure of inflation, which excludes prices of energy, food, alcohol and tobacco, increased by 1.6 % in January compared with the same month last year and an increase of 1.7 % in December, recording the smallest increase since June 2009. Compared with the previous month, the CPI fell in January by 0.6 %, which was unchanged compared to December, and it turned out as expected. The GBP / USD pair fell to $ 1.6652 during the European session.

American trading session:

Japanese Yen: The yen fell sharply earlier against the U.S. dollar, which was associated with the Bank of Japan's decision to increase the monetary base by 60-70 trillion yen (686 billion dollars). Central Bank doubled lending program until 7 trillion Yen to support the economy. This doubling of lending is seen as deep signal, meaning that the regulator is likely to further weaken the ready and their policy as it seeks to maintain liquidity volumes. In addition, the Bank of Japan extended periods of both programs for the year. Thus, the central bank kept the asset purchases unchanged, but decided to implement additional stimulus in the coming months. Regulator still aims to achieve the inflation target of 2 % and intends to achieve an economic breakthrough. The decision was taken by the members of the Monetary Policy Committee unanimously. The USD / JPY pair rose to Y102.73, and then retreated slightly during the European session.

Gold: The gold prices keep rising and near the peak of 3.5 months due to the weak dollar and concerns over global economic growth. The cost of the April gold futures on the COMEX today rose to $ 1332.40 per ounce.

Oil: The cost of oil rose today on speculation that the stocks at Cushing (Oklahoma) fell last week, while cold weather boosted demand for fuel. The March futures price for WTI rose to $ 101.62 per barrel on the New York Mercantile Exchange (NYMEX).