With the Bank of England’s rate decision looming, the Pound was trading within touching distance of a four-year high against the US Dollar.
The British asset was little-changed after the BoE Monetary Policy Committee acted as economists expected and left interest rates unchanged.
The benchmark rate was held at 0.5 per cent and the bond-purchase target remained 375 billion Pounds.
Interest rates have now been held at record lows for six years.
Although investors are betting that encouraging UK reports could push the central bank into increasing interest rates next year, BoE Governor Mark Carney has been keen to reassure markets that the emergency stimulus will remain in place until the UK’s economic recovery is more assured.
Yesterday former MPC member Kate Barker defended the BoE’s decision to keep interest rates low despite the detrimental impact on the nation’s savers. She asserted; ‘We were trying to offset the risk of the economy moving into some appalling downward spiral. I hope we see interest rates going up in a year’s time. That will mean for me that the economy is getting stronger’.
Two BoE officials recently intimated that it wasn’t ‘unreasonable’ to suppose that an interest rate increase may occur in the spring of 2015.
While UK economic data released over the last few weeks hasn’t quite achieved the dizzy highs of reports published in the second half of last year, the UK’s economic outlook is fairly bright and some investors are hoping that the nation will enjoy its best year of growth since 2007 in 2014.
Consequently, the Pound is stronger against several of its most traded peers.
As currency strategist Michael Sneyd notes; ‘We still like Sterling and are currently looking for opportunities to put long positions back on. The data flow has been very solid and that should keep the Pound supported.’
Earlier in European trading the Pound was lifted by a Halifax house price report. The data revealed that house prices advanced by 2.4 per cent in February, month-on-month, rather than rising the 0.7 per cent expected.
January’s house price gain was also upwardly revised to 1.2 per cent.
As the day progresses GBP/EUR movement may occur in response to the European Central Bank’s rate decision.
US news, including the nation’s factory orders figures, will also be of interest.
With investors betting that tomorrow’s US non-farm payrolls report will fall short of estimates the Pound could extend gains against the ‘Greenback’ before the weekend.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6717 ,
Pound Sterling,,Euro,1.2157,
Pound Sterling,,Australian Dollar,1.8470,
Pound Sterling,,New Zealand Dollar,1.9766 ,
US Dollar,,Pound Sterling,0.5987,
Euro,,Pound Sterling,0.8223,
Australian Dollar,,Pound Sterling,0.5415,
New Zealand Dollar,,Pound Sterling,0.5052,
[/table]
Comments are closed.