Stimulus Remark Aids British Pound

The EURUSD hit its highest level since 16th December after the markets concluded that China’s recent monetary policy tightening would not have any serious impact on its own economy. Although the EURUSD achieved 1.4582, it failed to sustain this level because of concerns regarding a contracting German economy following a poor data release this morning.

After the China raised its banks’ required reserves ratio, the Yen suffered reversals with the USDYEN climbing 70 pips to 91.35 and the EURYEN achieving a 120 pip rise to 132.70.

The US Treasury Department and the US Federal Reserve both released reports today. The former stated that the US had recorded a $91.85 billion budget deficit in December whilst the latter advised that US economic activity remained at a low level.

The GBPUSD has risen impressively throughout the day and presently sits at 1.6280. This development was a reaction to a Bank of England official claiming this morning that the central bank was close to holding back further stimulus.