Good Morning. The Pound vs Euro rate fell yesterday after the Euro strengthened by corporate demand, which outweighed robust UK manufacturing activity data and helped drag the pound down to a 1 month low against the dollar. Rates @ 08:30am are as follows:
- GBP/EUR 1.1428
- GBP/USD 1.5912
- GBP/AUD 1.8096
- GBP/NZD 2.2534
- GBP/CAD 1.6853
- GBP/CHF 1.6829
- GBP/HKD 12.356
- GBP/HUF 307.34
- GBP/ZAR 11.896
- GBP/JPY 144.03
- EUR/USD 1.3919
The pound also weakened after opinion polls showed that an election this year may result in a hung parliment. This translated to political uncertainty, which gives investors the jitters. They then sell Sterling for a safe haven currency such as the US Dollar. The result is lower rates which we’ve seen this morning.
Bank of England & Quantitative Easing
The key event this week is the Bank of England’s policy decision on Thursday, where it is expected to signal an end to quantitative easing by refraining from any further increase in its 200 billion pound asset buying programme.
“The risk is if QE is extended, which would lead to a sharp sell-off in sterling and as such, risk-reward does not favour being long ahead of the decision,” said Adarsh Sinha, currency strategist at Barclays Capital.
Traders noted a Sunday Times report which said the BoE’s Monetary Policy Committee was set for a split vote on whether to expand its asset buying plan.
This data is out on Thursday lunchtime, and may prove volatile for Sterling
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