Although Mervyn King, former Governor of the Bank of England, made his final address to lawmakers today his comments had little effect on the Pound.
The Pound Sterling Exchange Rate was in the region of 1.5433 against the US Dollar as of 11:10 GMT
In reference to the fiscal stimulus King stated: ‘It’s a contingent path. And it’s contingent on conditions returning themselves to normal in order to allow interest to return to normal. We are nowhere near that yet. And I think people have rather jumped the gun thinking this means an imminent return to normal levels of interest rates. It doesn’t.
Until markets see in place policies to bring about that return to normal economic conditions, there is no prospect for sustainable recovery and without that prospect for sustainable recovery, markets understand that it will not be sensible to return interest rates to normal levels.’
Although recent economic data has painted a more positive picture of the UK than we’ve come to expect, Britain only just sidestepped an unprecedented triple-dip recession, and strong, sustainable economic growth is still a long way off.
Yesterday the Pound hit 1.5344 against the US Dollar, its lowest level for 20 days.
Ahead of today’s UK news, Sterling was little changed against the Euro and modestly stronger against the US Dollar.
According to one industry expert, new BOE Governor Mark Carney will need to step things up a gear if the UK economy is to drive forward significantly. Neville Hill of Credit Suisse Group AG asserts that Carney ‘will take a more radical approach to monetary policy. The Bank of England is going to focus on stimulating the economy more aggressively and more consistently under him.’
Meanwhile, today’s sale of UK government bonds caused assets due in 2060 to slide for a fourth day. The Debt Management Office is expected to sell as much as 4 billion Pounds of government bonds maturing in 2068 through banks.
These developments, and data showing that UK loans for house purchases surged by more than expected in May, had little effect on the Pound to US Dollar exchange rate.
The Pound hit 0.8476 against the Euro (EUR/GBP)
BBA data showed that the number of loans issued for home purchases last month advanced to 36,102 – significantly higher than the 33,200 figure forecast by economists.
April’s figure was revised to 32,952.
Other news with the potential to instigate Pound movement in the hours ahead includes US home price and durable-goods orders figures.
Investors will also be looking ahead to tomorrow’s Bank of England Financial Stability Report, due out at 10:30 GMT.
Current Pound Sterling (GBP) Exchange Rates
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5433 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1773 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6662 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9888 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6477 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8494 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6003 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5042 >
(As of 11:10 GMT)
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