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Session Recap: A solid dollar and a weak Sterling

FXStreet (San Francisco) - The foreign exchange market saw a solid dollar that advanced against its major competitors, especially compared to a pound which negotiates under pressure following a pessimistic inflation report from the Bank of England.

In stocks, Wall Street took a breath on Wednesday after the Dow Jones and the S&P posted small losses after recovering from initial declines. WTI Oil fell on the day, while the gold moved sideways around 1162.

The GBP/USD closed the day at 1.5775, below the previous 14-month low of 1.5790. It means a clear bearish signal for the rest of the week. According to ANZ analysts Amber Rabinov & Brian Martin, "The BoE was unambiguously more dovish in its November Quarterly Inflation Report."

Including a downgrade in inflation forecast and a softening in the outlook of the GDP, "prospects for a H1 2015 rise in the bank rate have been reduced," ANZ analysts continue, "this is negative for sterling near term and will act as a constraint on GBP vs USD, AUD and NZD".

The EUR/USD lost half recovery of Tuesday as the pair was rejected by the level of 1.2500 before closing at 1.2435. According to FXStreet chief analyst Valeria Bednarik, the EUR/USD "will take a break below 1.2400 to confirm further declines, with sellers now expected to reappear on approaches to the 1.2500 price zone."

On the Japanese side, the USD/JPY tested the 116.00 level for a second day but the pair failed to break above it and got a rejection that sent it to 114.90. However, the pair managed to regain levels and closed at 115.50.

BoE unambiguously more dovish - ANZ

The Bank of England’s (BoE) Quarterly Inflation Report (QIR) reflected an unambiguously more dovish outlook for the UK economy, notes ANZ Research Team.
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USD/JPY bulls remain stubborn on 115 handle

USD/JPY is trading at 115.53, down -0.04% on the day, having posted a daily high at 115.62 and low at 115.44.
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