The dollar lost ground against the euro and the sterling, relinquishing its gain from the previous session to fall to 1.4071 and 1.6379, respectively. The data released earlier included weekly jobless claims, wholesale sales and wholesale inventories. Weekly jobless claims improved to 565k, down from 614k a week earlier. The May wholesale inventories declined by less than estimated at -0.8% and improving from the April reading of -1.4%.
Pound Bounces on BoE
The British pound rallied sharply in London trading, prompted by the results of the Bank of England's monetary policy decision and sending cable above the 1.63-level. The BoE left interest rates unchanged at 0.5% and announced that it would maintain its current asset purchase plan at 125 billion pounds. The Bank said it would review the scale of the program again at its August meeting, alongside its latest inflation projections.
The sterling rallied sharply against the dollar, surging to 1.6379 from 1.6023 in the Thursday session. Markets had pushed the pound sharply lower earlier in the week in anticipation of the Bank of England's policy deliberations, with speculation for the BoE to further boost its asset purchase plan to stimulate the ailing UK economy.
The UK trade deficit improved by more than expected in May at 6.263 billion pounds, versus a 7 billion pound deficit in April. The non-EU trade deficit narrowed to 3.264 billion pounds, improving from 4.14 billion pounds a month prior. In the coming session, traders will turn to UK inflation data with June PPI due out at 4:30 AM.
Cable holds steady around the 1.6330-figure, with resistance seen at 1.6380, followed by 1.64 and 1.6440. Subsequent ceilings are eyed at 1.6460, backed by 1.65 and 1.6530. On the downside, support starts at 1.63, followed by 1.6265 and 1.6330. Additional losses will encounter floors at 1.63, backed by 1.6250 and 1.62.