Sterling ran into profit-taking and could face a difficult session as Governor Mark Carney faces questions from a Treasury Committee about the Bank of England’s latest growth and inflation forecasts. The pound fell against all of its main rivals on concerns that Carney could underline the bank’s dovish long-term position on interest rates. The euro gained, hitting a five-day high against sterling and is currently trading near three-week highs against the US dollar, supported by Chinese comments in favour of a strong single currency. The high-profile nuclear deal with Iran also helped risk sentiment, benefitting the euro before the speech from the European Central Bank’s Yves Mersch. Bank of Japan meeting minutes did the yen no favours, with the Japanese currency hitting fresh multi-year and multi-month lows against the pound and US dollar respectively. This helped the US dollar bounce higher in pre-Thanksgiving holiday trading although the greenback is back under pressure from a stronger euro.
Sterling
Sterling ran into profit-taking, slipping against all of its major rivals before Mark Carney faces a Treasury Committee to answer questions about the Bank of England’s latest quarterly inflation and growth forecasts. Continued emphasis by central bank officials on keeping low interest rates in place for longer could weigh on the British currency. On the other hand, the pound may climb if Carney gives the committee a very upbeat assessment of the UK economy, perhaps giving investors the impression that 2014 will be a strong year of economic growth in Britain.
US dollar
Choppy pre-Thanksgiving trading gave the US dollar a lift but the greenback has opened lower after data on the US housing market missed expectations. The US dollar is currently trading close to a three-week low against the euro after US pending home sales dropped in October, leaving those analysts expecting a gain disappointed.
Japanese Yen
The yen fell to fresh multi-year and multi-month lows against the pound and US dollar respectively as traders continue to bet that Japanese officials will continue press the yen lower with economic policies.
Euro
The euro reversed a small portion of its recent losses, bouncing to a five-day high against sterling and the single currency could find further support after Chinese officials talked up the importance of a strong euro. Governor of the People’s Bank of China, Zhou Xiaochuan, reaffirmed that the euro remains a key part of China’s reserve management, a position that is likely to offer the single currency support at lower levels.