alexis tsipras / Bank of England / BoE / dollar / ECB / euro / European central bank / financial market / forex / Greece issues / macroeconomic analysis / pound / Sterling / Yanis Varoufakis

Sterling boosted by BoE Inflation Report.

Sterling scaled a six-week peak earlier this morning following recent hawkish-sounding comments from the Bank of England, while the other major currencies were subdued in a holiday-riddled week. U.S. markets are shut today for the Presidents’ Day holiday, while many centres in Asia will be closed later this week for the Lunar New Year holidays. The pound climbed as far as $1.5435 in early trade, from around $1.5407 late on Friday in New York, reaching a high last seen on Jan. 2. It was last at $1.5415. Investors have been warming to sterling after relatively hawkish signals from the BoE recently. Both Governor Mark Carney and his deputy, Ben Broadbent, have said the next move in interest rates is likely to be up. Martin Weale, a policymaker at the central bank, added some sense of urgency by saying the bank will need to start raising interest rates sooner than investors expect as inflation recovers from current low levels.

The euro edged up in Asia this morning ahead of key talks between Greece and its international creditors aimed at hashing out a last-minute debt deal. The single currency rose to $1.1416 from $1.1393 and to 135.38 yen from 135.29 yen in US trading, with the common currency winning some support from better-than-expected  euro-zone growth data last week. Greek Finance Minister Yanis Varoufakis will today meet his counterparts from the euro-zone in Brussels to get their backing for an overhaul of the austerity-laden bailout, which Athens says has crippled the country’s economy. While it faces stern opposition, mostly from key European paymaster Germany, Varoufakis and Prime Minister Alexis Tsipras say they are confident they can win over sceptics.

The dollar was lower against the yen in thin and directionless Asian trade Monday, with investors having a relatively muted reaction to weaker-than-expected Japanese gross domestic product data. The greenback slightly weakened soon after the GDP release but then recouped much of its earlier losses with short covering kicking in amid moderate gains in the Nikkei Stock Average. Adding to the directionless mood was the closure of U.S. markets for the Presidents Day national holiday. Government data showed Monday that Japan’s gross domestic product increased at an annualized pace of 2.2% in the three months through December, pulling out of a recession.


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