24th February 2011
Good morning. Sterling rose yesterday after the BoE minutes showed renewed appetite for an interest rate hike. The gains were short lived though, as focus returns to the poor performance of the UK economy. At 08:30am this morning rates are as follows:
- GBP/EUR 1.1769
- GBP/USD 1.6160
- GBP/AUD 1.6117
- GBP/NZD 2.1690
- GBP/CAD 1.5935
- GBP/CHF 1.4998
- GBP/ZAR 11.476
- GBP/JPY 132.32
- GBP/HUF 322.86
- GBP/NOK 9.1076
- EUR/USD 1.3723
Bank of England minutes
Another Bank of England policymaker has voted for an interest rate rise, suggesting rates could be raised sooner rather than later. Spencer Dale has joined Andrew Sentance and Martin Weale in backing a rise, minutes yesterday showed. The remaining six MPC members voted to keep rates at historic 0.5% lows.
The minutes also suggested that some of those opposed to a rate hike this month would consider a rise if the economy shows signs of picking up after unexpectedly contracting at the end of 2010. The pound has rallied all year so far, as rate rise expectations have gathered steam, but analysts said investors were becoming more hesitant to push sterling higher on concerns monetary tightening could threaten the economy’s fragile recovery.
“The simple takeaway of the minutes would be that there’s been a move to a more hawkish view on the board given inflation concerns,” said Henrik Gullberg, director of currency strategy at Deutsche Bank.
He added: “Higher rates in the UK, which would be primarily driven not so much by strong demand and activity but by inflationary fears, could be counterproductive in terms of the strength and sustainability of the recovery.
“This is not necessarily positive for the currency. That’s why we haven’t seen a stronger reaction from sterling.”
So, while there was an initial lift in the value of Sterling immediately after the minutes, the Pound quickly dropped back away as the state of the UK recovery took centre stage again.
Today from the EU we see economic and industrial confidence measures. These give a good idea how consumers feel about the economy and so could affect GBP/EUR rates. From the USA there are some jobless and home sales figures in the afternoon.
Do you want to achieve commercial exchange rates for a currency transfer? Click the banner below to send us an enquiry today.