Sterling is Wednesday’s outperformer after some hawkish talk from a Bank of England policy maker earlier this morning.
Bank of England Monetary Policy Committee Member Andrew Sentance told the Guardian newspaper that the central bank should pause its bond purchases to as to gauge the risks to inflation.
Furthermore, when asked whether investors should bet on stable interest rates for 2010, he responded, “It would not be wise to put yourself in that camp. A lot can happen in a year.”
The comments were enough to offset an unexpectedly weak manufacturing report from the region.
The country’s November manufacturing production came in flat for November despite forecasts for a 0.2% increase and after a flat reading the previous month’s level.
Annual production was down 5.4% in November, faster than forecasts for a 5.1% decline and prior 7.8% slide.
Meanwhile, industrial production rose 0.4% month-over-month in November, faster than calls for a 0.3% increase and prior flat reading, and annual production was down 6.0%, just slower than expectations for a 6.1% slide and previous 8.4% contraction.
In the immediate aftermath of the release, GBP/USD briefly popped lower by 29 pips to 1.6238, before rebounding higher.
GBP/USD last traded 122 pips higher at 1.6286 after trading in a range of 1.6137 to 1.6294 today.
Short term resistance lies at 1.6341 with support at 1.5897.
Note that Sentance is a well known hawk on the central bank’s board, and some traders have said the pound’s gains have been over exaggerated.
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