Forex News: Pound Falls On King's Comments, Euro Gains On IFO Surprise
Pound
Bank of England Governor Mervyn King said the central bank is discussing "longer-term'' solutions to the credit crisis with U.K. financial institutions and will stick to current emergency lending plans for now.
King said in testimony to lawmakers that any plan of action must require banks' shareholders to shoulder the risk of losses and assist lenders to finance existing commitments, rather than subsidize new business or securities sales.
Lawmakers and economists have criticized King for refusing to loosen borrowing requirements to ease renewed money-market strains that yesterday pushed the cost of borrowing funds to the highest since December. Michael Fallon, a Conservative lawmaker questioning King today, has said the central bank is responding to market turmoil at a "snail's pace.''
The pound fell from $2.01 earlier in the day to below $2.00 after King's comments.
Euro
German businesses unexpectedly continue to gain confidence despite record oil prices and a strong Euro weighing on exports. The IFO survey reported an increase in confidence to 104.8 from 104.1 in February, despite predictions of a decline to 103.5. German companies have been able to remain competitive by reducing labor costs and becoming more efficient. China and Russia continue to be a source of growth for Europe’s largest economy, which has allowed it to remain resilient. Meanwhile, Eurozone industrial new orders rose 2.2% in January pulling the yearly gauge up to 7.3%. As the region continues to show strength, the prospect of an ECB rate cut in the near term are diminishing. Which was validated by President Jean Claude Trichet today, when he reiterated his focus on price stability in a speech to European Parliament .
The euro rose from $1.5585 to $1.5750.
Bank of England Governor Mervyn King said the central bank is discussing "longer-term'' solutions to the credit crisis with U.K. financial institutions and will stick to current emergency lending plans for now.
King said in testimony to lawmakers that any plan of action must require banks' shareholders to shoulder the risk of losses and assist lenders to finance existing commitments, rather than subsidize new business or securities sales.
Lawmakers and economists have criticized King for refusing to loosen borrowing requirements to ease renewed money-market strains that yesterday pushed the cost of borrowing funds to the highest since December. Michael Fallon, a Conservative lawmaker questioning King today, has said the central bank is responding to market turmoil at a "snail's pace.''
The pound fell from $2.01 earlier in the day to below $2.00 after King's comments.
Euro
German businesses unexpectedly continue to gain confidence despite record oil prices and a strong Euro weighing on exports. The IFO survey reported an increase in confidence to 104.8 from 104.1 in February, despite predictions of a decline to 103.5. German companies have been able to remain competitive by reducing labor costs and becoming more efficient. China and Russia continue to be a source of growth for Europe’s largest economy, which has allowed it to remain resilient. Meanwhile, Eurozone industrial new orders rose 2.2% in January pulling the yearly gauge up to 7.3%. As the region continues to show strength, the prospect of an ECB rate cut in the near term are diminishing. Which was validated by President Jean Claude Trichet today, when he reiterated his focus on price stability in a speech to European Parliament .
The euro rose from $1.5585 to $1.5750.