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The BoE Keeps Interest Rates Unchanged

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The Greenback rose as much as 1% against a basket of other currencies after the U.S. Federal Reserve hiked rates for the first time in a year. The U.S. dollar hit 14-year high and its index touched 103 pips.

The yellow metal declined yesterday and has touched its lowest level since last February.  The yellow metal settled at $1,122, before recovering. Technically, the precious metal could hold $1,130 throughout the day.

Also on Thursday, the Bank of England held rates at a record low 0.25% at its December meeting. It left its plans for government and corporate bond purchases unchanged. The BoE said sterling's strong performance over the past month could soften due to an expected rise in British inflation next year, as its policymakers voted unanimously to hold interest rates unchanged.

However, GBP fell to a two-week low vs. USD and traded below $1.2375, negatively affected by a strong U.S. dollar. Technically, Cable is unlikely to trade above $1.25 during the day.

Euro fell as much as 1% and hit a 14-month low, negatively affected by a strong USD. The common currency declined after Federal Reserve officials increased interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017. Technically, Fiber could settle below $1.04 during the day.

Oil prices failed to pare earlier losses as the dollar rallied following an increase in U.S. interest rates. U.S. crude settled below $51 and could trade at the same level during the day.

The most important economic events:

  • USD Housing Starts (MoM) (NOV): (GMT: 15:30) – Medium – Forecast (-6.8%) – Previous (25.5%).
  • USD Building Permits (MoM) (NOV): (GMT: 15:30) – Medium – Forecast (-1.2%) – Previous (0.3%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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