The MPC voted to keep their benchmark rate and asset purchase program on hold for another month

GBP/USD

Range: 1.5649 – 1.5742

Support: 1.5670

Resistance: 1.5800

The MPC voted to keep their benchmark rate and asset purchase program on hold for another month. Previous comments from Adam Posen will put the focus on the meeting minutes. The lone American on the committee has stated there is a “clear” case for adding to the central banks QE’s efforts. The key is to see if there was a split tally at the last vote with the potential for a new group calling for additional measures. Andrew Sentence has been the main driving force behind a rate hike, however further calls for stimulus could have a very negative effect on the Pound.

Bank of China

The People’s Bank of China (PBOC) announced yesterday that the one year lending and deposit rates will be increased by 25bp to 5.56% and 2.5% respectively, and it seemed the market participant reacted negatively to the policy shift. The move by the PBOC suggests that the rapid pace of expansion in the region has increase the chance for an asset bubble in China, and fears surrounding the outlook for global growth may bear down on risk sentiment as investors weigh the prospects for a sustainable recovery.

EUR/USD

Range: 1.3697 – 1.3801

Support: 1.3675

Resistance: 1.3830

EURUSD extended its downward rally towards a fresh 2-week low at 1.3697, and since has bounced off those trades trading around the 1.3780 level. This is around 70 pips greater than its opening price. The uncertainty within the pair has been caused by serious doubts over the reliability of statistics from government officials in various EU economies. The suggestions of understated debt (Greece), liquidity needs and financial stability, are very concerning. The ECBs President Trichet’s suggestion that not all statistics are dependable is remarkable.

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