Sterling down after BoE minutes

Good Morning. Sterling dipped against the US Dollar and Euro this morning after Bank of England policy minutes for December showed a unanimous vote to keep rates at a record low and maintain its asset purchasing target. Rates @ 11:15am are as follows (later than usual – I was stuck in the snow!)

  • GBP/EUR 1.1178
  • GBP/USD 1.5939
  • GBP/AUD 1.8217
  • GBP/NZD 2.2782
  • GBP/CAD 1.6800
  • GBP/CHF 1.6674
  • GBP/JPY 146.26
  • GBP/ZAR 12.284
  • EUR/USD 1.4254

Bank of England Minutes
All nine members of the Bank of England’s Monetary Policy Committee (MPC) voted to hold interest rates at its December meeting. Minutes from the meeting also showed that the MPC was unanimous in voting to maintain the £200bn quantitative easing (QE), or asset buying, programme.

The MPC agreed that the medium-term outlook for inflation had not changed since its November inflation report, and also said that it was difficult to identify with any certainty whether the economy had turned, adding that events in Dubai and Greece were a reminder of the potential for shocks that might impact the UK.

So, with the UK remaining the only major economy still in recession, fears continue over when we will recover, and this is reflected in the value of the pound at the moment.

Gross Domestic Product
Yesterday we had the revised GDP for the UK. Labour’s economic credibility was further damaged after new figures revealed Britain’s economy remains mired in recession.

While France and Germany came out of recession in June, the figures reveal Britain’s economy shrank by a worse than expected 0.2% between July and September.

Economists had been hoping for Britain to begin emerging from recession, but in a fresh blow to Chancellor Alistair Darling, a fall in output for the UK’s powerhouse services saw the economy dragged lower.

Earlier this month, Mr Darling forecast in his Pre-Budget Report that the economy would contract by 4.75 % this year and would grow by between 1 and 1.5 % during 2010.
But experts fear those figures are optimistic and the British economy could struggle to begin to grow next year.

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