Dollar Rebounds Amid BoE Cut

The dollar recovered against the euro and sterling following central bank policy announcements from both the Bank of England and European Central Bank in the morning. The US economic reports released today saw the February trade deficit expand to $62.32 billion, up from $58.20 billion and worst than expectations for the deficit to shrink to $57.5 billion. Meanwhile, weekly jobless claims improved to 357k, down from 407k a week earlier.

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GBP Mixed on BoE Cut

The Bank of England, as expected, cut rates by 25-basis points to 5.0% when it announced its decision earlier in the session. In the accompanying statement, the BoE acknowledged that credit conditions have tightened and the availability of credit have deteriorated. It said that despite the declines in the sterling providing support for net exports, “the prospects for output growth abroad have deteriorated”. The Bank stated that “in the UK, business surveys suggest that growth has begun to moderate and that a margin of spare capacity will emerge during this year.” The BoE expects this moderation to temper inflationary pressures in the medium term.