The pound extended its early rally against its major opponents in the European session on Thursday, after the Bank of England kept its interest rates unchanged and reiterated that gradual rate increases would be needed in the coming years given uncertainty over Brexit.
The Monetary Policy Committee, led by Governor Mark Carney, voted 9-0 to keep the key rate unchanged at 0.75 percent.
The committee also unanimously decided to maintain the quantitative easing through asset purchases at GBP 435 billion.
Policymakers judged that the current stance of monetary policy remained appropriate.
The bank reiterated that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.
On the economic front, survey results from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK manufacturing sector grew at the slowest pace in more than two years in October.
The manufacturing Purchasing Managers’ Index fell to a 27-month low of 51.1 in October from revised 53.6 in September. The score was forecast to drop moderately to 53.0.
The currency strengthened against its major counterparts in the Asian session, following a media report that the U.K. and the European Union have struck a tentative Brexit deal that would grant U.K. companies continued access to European markets.
The U.K. currency rose back to 1.2967 against the franc, just a few pips short of a 9-day high of 1.2971 touched at 4:15 am ET. The pair was valued at 1.2873 when it had closed deals on Wednesday. The pound is seen finding resistance around the 1.31 region.
Data from the Federal Statistical Office showed that Switzerland’s consumer prices increased at a faster pace in October.
Inflation rose slightly to 1.1 percent from 1 percent in September. The rate came in line with expectations. Prices have been rising since January 2017.
The pound resumed its early gains against the greenback, advancing to an 8-day high of 1.2934. This marked a 1.4 percent gain from a low of 1.2761 seen at 5:00 pm ET. At Wednesday’s close, the pair was worth 1.2766. Next key resistance for the pound is seen around the 1.31 level.
After a brief pause, the pound extended its early rally to an 8-day high of 145.97 versus the yen. The pound-yen pair had finished Wednesday’s trading at 144.17. Further uptrend may take the pound to a resistance around the 148.00 area.
The latest survey from Nikkei showed that Japan manufacturing sector continued to expand in October, and at a faster rate, with a four-month high manufacturing PMI score of 52.5.
That’s up from 52.5 in September, and it moves farther above the boom-or-bust line of 50 that separates expansion from contraction.
The pound was higher at 0.8826 against the euro, up from a low of 0.8864 set at 8:00 pm ET. The currency is thus heading to pierce a 9-day high of 0.8805 hit at 4:40 am ET. The euro-pound pair was quoted at 0.8862 at yesterday’s close. Continuation of the pound’s uptrend may see it finding resistance around the 0.86 level.
Looking ahead, U.S. ISM manufacturing index for October and construction spending for September are slated for release in the New York session.