Pound Sterling (GBP) Exchange Rate Softens on Bank of England Minutes

Pound Sterling (GBP) Exchange Rate softens on Bank of England Minutes

The Pound Sterling (GBP) Exchange Rate was little changed against the US Dollar (USD) and softened slightly against the Euro (EUR) after the minutes of the Bank of England’s July policy meeting showed that policy makers voted unanimously in favour of leaving interest rates unchanged at record lows.

The minutes showed that some policy makers were edging closer to voting for a rise in interest rates but worries over weakness in wage growth has caused concern.

Some members of the policy committee were shown to be concerned that raising interest rates too early could have a detrimental impact on the UK’s economic recovery. Signs of weakness in the Eurozone and wider global recovery also caused them to wait.

The minutes showed that the weakness in wage growth is becoming more striking, especially after the nation’s inflation rate increased to 1.9% last month, just below the BoE’s target of 2%.

‘The weakness of wages in the face of strong rises in employment was becoming more striking, and there was reason to believe that reductions in labour market slack were taking longer to affect wage growth, and that the effective supply of labour had increased. The Committee agreed that no increase in rates was warranted at this meeting, although for some members the decision had become more balanced in the past few months than earlier in the year,’ the minutes said.

The minutes also highlighted that the Bank was increasingly confused as to why the financial markets were not reacting as strongly as expected to geopolitical concerns. Last week a member of the Bank’s financial policy committee told MP’s that the market tendency to ignore geopolitical risks was ‘just bizarre’.

With conflicts in Ukraine, Iraq, Syria, Libya, Gaza and tensions in Asia there is plenty of geopolitical concerns out there. Even oil prices which are often heavily impacted by risk has acted in a muted way with prices rising briefly before settling back down again.

Also putting some pressure upon Sterling was the release of a separate report which showed that Mortgage approvals in the UK increased less-than-expected last month. According to the British Bankers Association, the number of new mortgages approved rose to 43,300 last month. Economists had widely been expecting a figure of 43,400.

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,1.7042 ,
Pound Sterling,,Euro,1.2654 ,
Pound Sterling,,Australian Dollar,1.8059 ,
Pound Sterling,,New Zealand Dollar,1.9649 ,
US Dollar,,Pound Sterling,0.5860 ,
Euro,, Pound Sterling ,0.7889 ,
Australian Dollar,, Pound Sterling ,0.5531 ,
New Zealand Dollar,,Pound Sterling,0.5084 ,

[/table]