During European trading the Bank of England’s decision to leave interest rates unaltered saw the Pound trim recent gains against the US Dollar and decline against the Euro.
As expected by economists, the central bank also opted to leave the level of asset purchases unaltered.
The BoE left interest rates at a record low of 0.5 per cent in spite of the recent upbeat economic reports for the UK and the International Monetary Fund’s recent decision to positively revise the nation’s growth forecast to expansion of 2.9 per cent in 2014.
For the last few months the central bank has erred on the side of caution, assessing the level of slack in the economy and refraining from taking any decisive action, and this month’s decision was likely to be another unanimous one.
The bank currently estimates that the level of slack in the UK economy stands at 1 -1.5 per cent of GDP, although Bloomberg News published this contradictory quote today from economist Philip Rush; ‘The slack will be used up more quickly than the Bank of England predicts. By November there won’t be enough to keep inflationary pressures in check and the bank will have to increase rates.’
In the immediate aftermath of the BoE rate decision the Pound shed some of yesterday’s advance against the ‘Greenback’ and weakened against several of its other most traded peers.
The GBP/AUD pairing consolidated losses after the BoE decision having softened considerably during Australasian trading thanks to surprisingly strong Australian employment figures.
The British currency had been supported earlier in the European session by the news that UK house prices picked up last month, with sales reaching a six-year high in March.
The Royal Institution of Chartered Surveyor’s house price balance advanced from +47 in February to +57 last month, beating estimates for a reading of +44.
According to the data, house prices increased in every area of the UK.
In other currency news, the US Dollar remained under pressure following the release of the Federal Open Market Committee’s meeting minutes and the Euro was trading in a narrow range against rivals like the Pound ahead of tomorrow’s German inflation figures.
With UK news lacking tomorrow, global economic developments will be responsible for driving Pound movement 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,1.6773 ,
Pound Sterling,,Euro,1.2097,
Pound Sterling,,Australian Dollar,1.7803,
Pound Sterling,,New Zealand Dollar,1.9276 ,
US Dollar,,Pound Sterling,0.5962,
Euro,,Pound Sterling,0.8265,
Australian Dollar,,Pound Sterling,0.5616,
New Zealand Dollar,,Pound Sterling,0.5197,
[/table]
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