Sterling stabilises after BoE, U.S. jobs data eyed

TOKYO - Sterling stabilised against the dollar on Friday after plunging the previous day when Britain’s central bank said it would expand its quantitative easing plan, while investors awaited key jobs data in the United States.

By (Reuters)

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Published: Fri 7 Aug 2009, 8:02 AM

Last updated: Thu 2 Apr 2015, 8:29 AM

The Bank of England on Thursday kept interest rates unchanged but surprised markets by raising the size of a bond purchasing programme designed to boost lending.

The BoE’s decision on its asset buying scheme prompted investors to take profits in a recent run-up in sterling, sending the currency down more than 1 percent against the dollar.

The European Central Bank also kept interest rates on hold at a record low on Thursday and hinted growth could return sooner than previously thought, although the eurozone economy will remain weak this year.

“Since the BoE and the ECB hold cautious views on the economy, both the pound and the euro could have seen more correction as they had risen rapidly on expectations on the economy,” said Yuji Saito, head of the FX sales department at Societe Generale in Tokyo.

“The correction in the both currencies appeared to have been limited as investors are waiting for the U.S. employment report,” he said.

Sterling edged higher 0.1 percent from late U.S. trade on Thursday to $1.6792, retreating from this year’s peak of $1.7044 on Reuters dealing system hit this week. It fell as far as $1.6752 the previous day.

The euro was 0.1 percent higher at $1.4363, also retreating from a 2009 high of $1.4448 hit on trading platform EBS earlier this week.

The U.S. will release its July employment report later on Friday. Economists in a Reuters survey forecast 320,000 jobs were lost in the month compared with a loss of 467,000 jobs in June.

The unemployment rate is seen at 9.6 percent, which would be the highest since June 1983, compared with a 9.5 percent rate the previous month.

Dealers said that market sentiment remained upbeat and that this will continue unless the employment report shows any negative surprises.

Data on Thursday that showed the number of U.S. workers filing for first-time jobless benefits fell sharply in the week to Aug.1, whetted appetites for more good news on the job front.

The dollar was steady at 95.48 yen.

Among commodity-linked currencies, the Australian dollar was holding steady at $0.8405, little changed from U.S. trade on Thursday and the New Zealand dollar was up 0.1 percent at $0.6707.

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