Yesterday’s Bank of England Inflation report and forward guidance comments continued to support the Pound during the European session.
The central bank’s decision to announce a link between interest rate increases and declining unemployment triggered Sterling fluctuations yesterday but the British currency managed to come out on top.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.5506 as of 11:40 GMT
1 US Dollar is currently worth 0.6449 pence
The Pound initially declined after the BoE stated: ‘The Monetary Policy Committee judges that, until the margin of slack within the economy has narrowed significantly, it will be appropriate to maintain the currently exceptionally simulative stance of monetary policy. Framing guidance in terms of the likely response of monetary policy to economic developments [as appose to pegging it to a specific time line] will make it more effective. […] The action taken by the committee would depend on its assessment of the appropriate setting of monetary policy required to fulfil its remit to price stability.’
But losses were short lived.
The GBP/USD exchange rate hit a low of 1.5483
Sterling has managed to consolidate gains overnight to trade in region of a seven-month high against the US Dollar and was close to a month-high against the Euro before a report showed that German exports outstripped imports by more than anticipated.
The GBP/EUR exchange rate held steady after the European Central Bank released its monthly report.
In the report it was reiterated that rates will stay low for an extended period.
The document, while remarking on the recent positive confidence indicators for the Eurozone, also contained the following comment: ‘Inflation expectations for the Euro area continue to be firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2% over the medium term’.
Before the weekend the Pound could see further volatility as trade balance figures for the UK are published.
UK construction output data will also be of interest.
An absence of economic news for the Eurozone on Friday means that the GBP/EUR pairing is likely to continue being driven by UK developments.
Current Pound Sterling (GBP) Exchange Rates:
< Down > Up
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5506 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1609 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7094 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9449 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6449 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8615 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5849 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5138 <
(As of 11:40 GMT)
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