April 25 Thursday 11:30 GMT
The euro made extended gains to 1.3075 from 1.3025 (+50 points) and held firm to these levels after the comments of German Chancellor Angela Merkel, and as the Japanese yen gained.
Ms Merkel said that “The ECB would have to raise interest rates if it were looking at Germany alone, but is in a difficult position because economic performance across the euro zone varies widely.” Merkel’s unusual comments, which surprised a few came at a time when most market analysts expected the ECB to lower their interest rates, given the recession and inflation setback in the euro zone.
Cable rallied by nearly 180 points against the dollar on a steep ascent to 1.5458 from 1.5280 following a better than expected rise in the U.K. GDP in the first quarter.
Britain’s economy avoided a triple-dip recession and the data provided relief to the government which has been criticized over its austerity measures.
The U.K. GDP rose to a better than expected +0.3 percent in the first quarter, well above the median forecast of +0.1 percent.
The year-on-year reading was +0.6 percent, the strongest rise since the end of 2011.
The economy shrank by -0.3 percent in the last quarter of 2012, so another contraction would have placed Britain into its third recession in a span of five years.
The Japanese Yen made some extended gains in Europe as the rates came off modestly for Dollar-Yen touching the 99.00 level. High 99.43 Low 98.97.
Euro-yen on the other hand is holding steady at 129.60 in an 80-point range against the firm euro. High 129.85 Low 129.05
Japanese investors reduced their holdings of foreign denominated bonds in the week ended April 19 according to the Japan Ministry of Finance. They sold a total of 3.43 trillion yen in the six-week period.
The Bank of Japan will hold its monetary policy meeting tomorrow and will release its forecast for the Japanese economy and inflation. The BOJ is expected to raise its forecast for price gains for the fiscal year 2014.