Sterling falls on bearish comments from BoE's King

[imperialfxonline]

Daily FX Market Review

Sterling falls on bearish comments from BoE's King

The sterling declined around 0.7 percent against the dollar and euro on Wednesday as comments made by Bank of England Governor Mervyn King following the inflation report were taken as bearish and overshadowed the better-than-expected jobs data, which saw a larger fall in jobless claims than predicted. King said that downside risks to the U.K. economy had increased and that further asset purchases cannot be ruled out. His statements dampened sentiment despite the replacement of the U.K. Prime Minister Gordon Brown by Conservative Party leader David Cameron.

Euro managed to edge out small gains against the yen and greenback as concerns over the euro region sovereign debt crisis waned, with Spain announcing austerity measures to reduce its budget deficit and bond spreads narrowing. Eur/usd bounced from an intra-day low of 1.2605 while the eur/jpy was up almost 0.5 percent and trading near the 118.00 level. The yen was broadly lower on the day as investors' risk appetite increased and pushed equities in Europe and the U.S. up over one percent.

The Australian dollar rallied after the release of employment data which showed that 33,700 jobs were added, which was higher than the consensus forecast. The unemployment rate also ticked higher to 5.4%. Spot gold continued its impressive march to a new record high around $1244 before pulling back on profit taking.