"Euro, British Pound Rebound Amidst Signs of Improving Trade, BOE Issues Neutral Policy Statement
The euro and British pound both shot higher today, due mostly to a US dollar pullback. However, there were also supportive fundamental forces on hand amidst evidence that export demand in the Euro-zone appears to be picking up, as seen in trade reports from some of the region's biggest trade partners: Germany and the UK. First, the German Federal Statistics Office said that the nation's trade surplus expanded to 9.6 billion euros in May as exports rose 0.3 percent (seasonally adjusted) and imports tumbled 2.1 percent (seasonally adjusted).
Likewise, the UK's Office for National Statistics reported that the nation's trade deficit narrowed to 6.3 billion pounds in May, the least in three years, due primarily to a 4 percent drop in imports. While overall exports fell by 0.8 percent, shipments to European Monetary Union (EMU), EU25, and EU 27 countries all rose, highlighting how dependent the UK economy is on a Euro-zone recovery. Another driver of strength for the British pound came from the Bank of England, which left the Bank Rate unchanged at 0.50 percent and signaled no changes to their quantitative easing program. Based on the broad gains made by the British pound, it is clear that the markets had been anticipating a statement in which the BOE would indicate that they would step up their gilt purchases. Nevertheless, the latest policy statement said that the BOE will “review the scale” of its QE program and its inflation expectations during their August meeting, making the next statement very important to watch.":
http://www.dailyfx.com/story/bio1/US_Dollar__Japanese_Yen_Lose_1247174745960.html
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