British pound bounces back after hawkish BOE decision
The euro dropped to the lowest level since December 1 even after the relatively strong Eurozone retail sales data. The numbers showed that the bloc's retail sales rose by 2% in December after dropping by 5.7% in the previous month. The increase was better than the median estimate of 1.6%. On an annualised basis, the sales increased by 0.6% after falling by 2.2% in the previous month. The currency also fell after the European Central Bank released its economic bulletin.
The Australian dollar rose slightly after the relatively mixed Australian trade numbers. According to the Statistics Bureau, the country's exports increased by 3% in December even as the country continued its spat with China. Australia exports to China grew by 21% to a 6-month high of A$13.3 billion. At the same time, imports declined by 2%, pushing the overall trade surplus to A$6.7 billion. The bureau will publish the latest retail sales numbers tomorrow. Earlier this week, the Reserve Bank of Australia (RBA) left its rates unchanged and boosted the QE.
The British pound rose today after the Bank of England delivered its interest rate decision. As widely expected by analysts, the bank left interest rates and its quantitative easing policy unchanged. All 9 members of the committee voted to leave rates unchanged. Further, in a statement, the BOE governor committed to continue supporting the economy. Earlier on, data by Markit showed that the UK construction PMI had dropped to 49.2 from the previous 54.6. Analysts were expecting the PMI to drop to 52.9.
The EUR/USD price fell sharply today partly because of the strong dollar. The pair fell to an intraday low of 1.1982, which was the lowest it has been since November. It also managed to move below the important support at 1.2000. The price also moved below the Ichimoku cloud, which is a sign that bears have taken control. Also, the price is along the lower line of the Bollinger Bands while the RSI has moved below the oversold level. Therefore, the pair will likely continue falling as bears target the next support at 1.1150.
The strong USD/JPY rally accelerated today, reaching a high of 105.27, which is the highest level since November 10. On the four-hour hour chart, the price has moved substantially above the previous bullish flag pattern. Also, it has moved above the 25-day and 15-day moving averages while the Relative Strength Index has moved to the overbought level of 70. While the pair's strong rally may continue, there is also a possibility that a pullback will happen as some bulls start taking profits.
The GBP/USD pair dropped to an intraday low of 1.3563 and then bounced back after the BOE decision. The pair is trading at 1.3627, which is on the lower side of the Ichimoku cloud. It is also slightly below the 15-day and 25-day moving averages while the RSI has risen slightly. Still, the pair will continue falling as bears target the next support at 1.3500.