Sterling buoyed by Bank of England's interest rate decision

Published: 09 August, 2012

Sterling had a positive day, buoyed by the Governor of the Bank of England who said cutting the central bank's interests rates would be more damaging than beneficial.

Currency rates - August 9.

EURO/GBP - 1.2652
US$/GBP - 1.5672
CHF/GBP - 1.5207
CAN$/GBP - 1.5571
AUS$/GBP - 1.4782
ZAR/GBP - 12.6494
JPY/GBP - 123.03
HKD/GBP - 12.1578
NZD/GBP - 1.9232
SEK/GBP - 10.4692
AED/GBP - 5.7545
US$/EURO - 1.2382
INR/GBP - 86.32

According to exchange rate information providers, Smart Currency, it dramatically reduces the probability of an interest rate cut in the near to medium term. Governor, Mervyn King went on to say that quantitative easing remained the primary instrument to stimulate the economy from a monetary policy perspective. He and other members of the Bank of England also expressed their feelings that the economy would rebound in the third quarter. However, contrary to this positivity he downgraded the UK's growth forecasts whilst the inflation report remains gloomy. Trade balance data is the main release on the agenda today in what is otherwise a relatively quiet day in the UK.

The euro had a particularly poor day yesterday dropping against the majority of currencies with Spanish benchmark 10 year bond yields climbed back up to nearly 7%. Standard and Poor's (one of the big three credit rating agencies) lowered Greece's CCC credit rating outlook to negative which highlights the difficulties that Greece continues to have with its debt. The Bank of France downgraded its growth forecasts and German industrial production fell by more than anticipated which highlights the poor state of the Euro zone economy. With little data out today other than the European Central Banks's monthly bulletin the markets will look elsewhere for influence.

The US dollar had a mixed day yesterday with contrasting comments coming from two members of the Federal bank over the last couple of days, one of which is calling for another round of quantitative easing to be implemented and the other suggesting that no such measures are necessary.

Elsewhere, the Norwegian krone, Swedish krona and South African rand all performed particularly well yesterday. Unemployment data from New Zealand and Australia was released overnight; whilst, Chinese Consumer Price Index (CPI) inflation figures and the Bank of Japan's rate decision were also announced. Later on today, trade balance data from Canada will be released.

To request an up-to-the minute quotation, call 0845 638 0571 or +44 (0) 207 898 0500 from outside the UK) or fill out our quote form

Printer friendly version