Thursday, the pound was mixed after the Bank of England decided to leave its key interest rate unchanged at a record low and retained the size of the quantitative easing.
At the end of two-day rate setting meeting, the Monetary Policy Committee led by Governor Mervyn King decided to hold the interest rate at 0.5%. The current rate is the lowest since the central bank was established in 1694.
Policy makers also voted to retain the stock of asset purchases financed by the issuance of central bank reserves at GBP 200 billion.
Earlier in the day, a report from the Office for National Statistics showed that the nation's manufacturing output fell 0.1% on a monthly comparison in December. Economists were expecting a 0.4% rise after increasing 0.6% in November.
Overall industrial production moved up 0.5% month-on-month, slightly down from November's 0.6% increase. The growth rate matched economists' expectations.
The pound that slipped to 0.8518 against the euro immediately after the rate decision snapped back shortly to reach as high as 0.8480 around 7:15 am ET. On the upside, the pound may find target level at 0.8470 in near-term and 0.8390 in a broader-term.
Price developments in the euro area needs to be monitored closely given that the currency bloc is facing short-term upward pressure on overall inflation, the European Central Bank said in its latest monthly bulletin released today.
The ECB said inflation is likely to stay above the bank's target of 2% in the coming months. Still, the bank said its current key interest rates remain appropriate.
The pound also traded in a similar fashion against the yen, hitting above the 133.0 level around 7:15 am ET from a low of 132.54. The pound-yen pair is presently worth 132.93 with 133.40 seen as the next likely resistance level and 132.0 as the probable support.
An index measuring prices for domestic corporate goods was up 0.5 percent in January, the Bank of Japan said today, standing at 103.9. That topped forecasts for an increase of 0.3 percent following the 0.4 percent gain in December.
On an annual basis, domestic corporate goods prices jumped 1.6 percent versus forecasts for a 1.4 percent increase following the 1.2 percent gain in the previous month.
Although the pound reached a low of 1.5430 against the Swiss franc after the rate announcement, it attempted to reverse direction shortly. The pair leveled off at 1.5470 around 7:20 am ET.
Switzerland's consumer price index, or CPI, rose 0.3% year-on-year in January, the Federal Statistical Office said today. Economists had forecast 0.6% rise after an increase of 0.5% in December and 1% in January 2010.
On a monthly basis, consumer prices were down 0.4%, quicker than the expected 0.2% fall.
The pound fell to a 9-day low of 1.6019 against the US dollar around 7:00 am ET but manged to hold steady thereafter. The cable is currently quoted at 1.6060.
The dollar outperformed today as traders relied on safe-have assets after Federal Reserve chief Ben Bernanke indicated yesterday that recovery in the world's largest economy was still fragile.
Looking ahead, the U.S. jobless claims for the week ended February 05 and wholesale inventories for December are expected to impact trading in the New York session.
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