The Pound falls against the Dollar and the Euro after King's comments

The British Pound fell against the dollar and the euro on Wednesday after Bank of England Governor Mervyn King said he had serious concerns about how quickly the UK economy may recover. During his testimony to the UK parliament, King also warned that a withdrawal of economic stimulus too quickly may create the risk of a renewed downturn, while keeping stimulus for too long may create inflation. BOE chief economist Spencer Dale said on Tuesday it was too soon to judge the effectiveness of the central bank's programme to buy a target of 125 billion pounds in UK assets to help boost the economy, but that early signs were positive. The GBP/USD is currently trading at $1.6330 as of 8:47am, London Time.

The greenback may decline against the Yen to 92.50 yen in two weeks after it fell below so- called support at 95.52 yen, Bank of Tokyo-Mitsubishi UFJ Lt. said, citing trading patterns. “The dollar has weakened below the 200-day moving average of 96.14,” which signals it may keep falling, Hashimoto said. The next support will be its May 22 low of 93.86, he said. Should it fall below that level, the greenback may then weaken to around 92.50, he said. Support at 95.52 yen represents the dollar’s low of June 17, according to Masashi Hashimoto, a senior analyst in Tokyo at the unit of Japan’s largest lender. The fact that the dollar stayed below its five-day moving average of 95.92 yen for a third day also indicates the greenback may extend losses versus the yen, Hashimoto said. The USD/JPY is currently trading at 96.45 as of 8:52am, London Time.

The Canadian Dollar lost some momentum after the Federal Reserve left its $1.75 trillion bond purchase program unchanged, boosting the appeal of the greenback as a refuge. The Loony strengthened earlier after the Organization for Economic Cooperation and Development boosted its forecast for the nation’s economic growth and a U.S. government report showing an unexpected jump in durable-goods orders sent North American stocks climbing. Canada’s currency will strengthen to C$1.13 against the U.S. dollar by year-end, according to the median forecast in a Bloomberg News survey of 37 economists and analysts. The USD/CAD is currently trading at 1.1550 as of 9:00am, London Time.

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