BRUSSELS (dpa-AFX) - The pound spiked higher against its major counterparts during the European session on Thursday, as the Bank of England raised its key interest rate for a second consecutive meeting to combat soaring inflation.
The Monetary Policy Committee of the BoE decided to increase the key interest by 0.25 percentage points to 0.50 percent.
While five members including Governor Andrew Bailey sought 25 basis points hike, other four members of the panel voted for a bigger 50 basis point increase.
The central bank intends to reduce its holdings of government bonds in a gradual and predictable manner.
The MPC unanimously decided to reduce the stock of UK government bond purchases, financed by the issuance of central bank reserves, by ceasing to reinvest maturing assets.
The committee also voted to reduce the stock of sterling non-financial investment-grade corporate bond purchases by ceasing to reinvest maturing assets and by a programme of asset sales to be completed no earlier than towards the end of 2023 that should unwind fully the stock of corporate bond purchase.
Final data from IHS Markit showed that the recovery in UK service sector gained momentum as restrictions related to the pandemic were eased and customer demand rebounded.
The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index picked up to 54.1 in January from a 10-month low of 53.6 in December. The score was also above the flash 53.3.
The pound showed mixed trading against its major rivals in the Asian session. While it dropped against the greenback and the euro, it held steady against the yen. Versus the franc, it rose.
The pound firmed to a 2-week high of 1.3628 versus the dollar, up from Wednesday's closing value of 1.3576. Immediate resistance for the pound is seen around the 1.39 level.
The pound appreciated to its highest level since January 18 against the yen, at 156.49. The pair was valued at 155.35 when it ended trading on Wednesday. The pound may face resistance around the 159.00 region, if it gains again.
The latest survey from Jibun Bank showed that Japan services sector dropped into contraction territory in January, with a services PMI score of 47.6.
That's down from 52.1 in December and it moves beneath the boom-or-bust line of 50 that separates expansion from contraction.
The pound gained 0.7 percent against the franc, touching a fresh 3-week high of 1.2563. At Wednesday's close, the pair was worth 1.2474. Further rise in the pound may see resistance around the 1.27 area.
The pound jumped to 0.8284 against the euro, a level unseen since February 2020. The pound had ended yesterday's trading session at 0.8324 against the euro. The pound is likely to find resistance around the 0.80 level.
Final survey data from IHS Markit showed that the euro area private sector eased in January as the Omicron variant of COVID-19 constrained activity, most notably across the service sector.
The composite output index dropped to 52.3 in January from 53.3 in December. The flash score was slightly below the flash 52.4.
Looking ahead, U.S. factory orders for December and ISM non-manufacturing PMI for January will be featured in the New York session.
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