The Pound has made a solid start to the day but downside pressures will persist.
The Pound received a timely boost this morning and made solid gains versus all of the 16 most actively traded currencies, after the latest monthly unemployment data was better-than-expected and the Bank of England voted unanimously to hold the asset purchase target unchanged this month. UK jobless claims came in marginally better at -5.9, while the unemployment rate held steady at 8%.
The data follows an unexpected rise in headline consumer prices yesterday, which saw the Pound rise through 1.57 against the U.S Dollar. The Bank of England said in the minutes that were released this morning that the decline in gross domestic product during the second quarter will be recovered in the third quarter but the pace of the recovery is likely to be disappointing.
The Pound has made a solid start to the day but downside pressures will persist, amid speculation of further quantitative easing to come and a possible downgrade to the UK credit rating. The BoE seem optimistic that the second quarter growth figures will improve during this quarter, but the data by and large doesn’t support this.
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