Sterling gains on BoE News

The pound rose across the board yesterday, after the minutes from the recent Bank of England meeting showed that all 9 members voted to keep the Quantitative Easing measures on hold, for the time being. Rates this morning are as follows:

  • GBP/EUR 1.1073
  • GBP/USD 1.6597
  • GBP/AUD 1.7959
  • GBP/NZD 2.1964
  • GBP/CAD 1.7370
  • GBP/CHF 1.6732
  • GBP/JPY 151.68
  • GBP/ZAR 11.172
  • EUR/USD 1.4981

Bank of England Minutes
The pound has rallied after the Bank of England said its monetary policy committee voted 9-0 earlier this month not to pump more cash into the economy.The MPC was also unanimous in agreeing to keep interest rates on hold at 0.5%.

The decision not to inject more money was seen as a positive sign that the UK economy was recovering and did not need further help from the central bank. The committee said that QE had had a “substantial” impact, but all members agreed that “recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agreed in August”.

The Bank raised the total amount of funds for QE by £50bn to £175bn in August, although Governor Mervyn King and two other policymakers had argued for a £75bn extension. The Bank publishes the minutes of its meetings on monetary policy two weeks after the event.

Gross Domestic Product
Figures out tomorrow could show that the UK has exited recession. The Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity and health.

This is the next main piece of UK data that will affect exchange rates. We expect the figures to show that Quarter on Quarter, the economy grew by 0.2%. The year on year figure is expected to show a decline of -4.6%. If the figures are better than this, then the pound may gain further. If figures are worse however, we could see the recent gains for the pound wiped out.

Todays Data
The main news from the UK will be the retail sales figures. This measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. A high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.

UK – Retail Sales
US – Jobless Claims
Can – Retail Sales
US – House Price Index
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