The sterling traded steadily near four-month high against the US dollar on Thursday, as uncertainty over the future of central bank stimulus programs caused greenbacks decline on a wide scale.
GBP/USD hit 1.5703 during European morning trade, highest value since February 11th, after which consolidation followed at 1.5662. The pair was down by a mere 0.08% for the day. Support was likely to be received at 1.5632, Wednesday’s low, while resistance was to be met at 1.5710.
European shares plunged on Thursday, following the sharp losses during the Asian session, as fears over the prospect of an exit of the central bank stimulus triggered a large sell-off in risk assets and the US dollar.
Earlier this week Bank of Japan disappointed market expectations by not taking measures to ease volatility in the government bond market. Bank of Japan’s lack of action, along with expectations that the Federal Reserve will begin to reduce scale of easing has encouraged widespread risk aversion.
Meanwhile, Bank of England said that higher inflationary expectations could lead to more stable inflation, but, however, expectations remained stuck to central banks target for the time being. Experts came with proof that financial markets through inflationary expectations, have become more reliant on economic development. Prices and earnings in the United Kingdom rose as a result of higher inflationary expectations.
Additionally, the pound remained supported after positive UK employment data, released on Wednesday, boosting optimism over the outlook for economic growth in the second quarter of the year.
Market players began focusing on the crucial series of economic indicators from the United States, including Retail Sales, Initial Jobless Claims and Import Price Index, scheduled to be announced later in the day.
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