The Pound fell against the US Dollar yesterday after the headline CPI inflation figure for April was released.
Sterling / Euro and US Dollar exchange rates
The Pound fell against the US Dollar yesterday after the headline CPI inflation figure for April was released at 3.0%. Yesterday’s results represented a 0.5% decline in price acceleration compared to this time last year, which sent the Pound to US Dollar exchange rate half a cent lower within an hour as fears heightened that the Bank of England may introduce further monetary easing measures. The Pound is currently trading around 1.5730 against the US Dollar.
Sterling initially slipped against the Euro on April’s weaker than expected Consumer Price Index figures, but a speech from former technocrat Greek Prime Minister Lucas Papademos, which investors interpreted as a warning that preparations for Greece to leave the Eurozone are being made, sent the Euro back down. Sterling is presently trading at 1.2420 against the Euro.
The drop in CPI is another step towards the Bank of England’s 2.0% inflation target. The Pound has suffered recently as poor economic data has led to calls for further economic stimulus from the Central Bank. However with the rate of inflation holding well above target, the BoE’s Monetary Policy Committee had refrained from intervening as to avoid sending inflation any higher. Yesterday’s figure gives the Central Bank the scope it needs to support the UK economy which makes another round of quantitative easing a distinct possibility.
The minutes for the latest Bank of England MPC meeting were released today and they showed that only one member – David Miles – voted in favour of increasing the asset purchasing fund this month, and that the decision was unanimous to maintain the current interest rate. For several members the QE assessment was said to be ‘finely balanced’ and long-standing dove Adam Posen has since made a public announcement that his calls to loosen monetary policy were prematurely made.
Confidence in Sterling was dealt another blow yesterday as Christine Lagarde, head of the International Monetary Fund, said that more could be done to support the UK economy through interest rate cuts or asset purchases.
The Office for National Statistics announced this morning that UK Retail Sales fell at the fastest monthly pace in over two years during April. Retail Sales declined by -2.3% compared to an expected -0.8% which sent the Pound 20 pips lower against the Euro and 30 pips down on the US Dollar immediately following the release.
Euro / US Dollar
The Euro lost over a cent yesterday to the US Dollar as the OECD downgraded their growth outlook for the Eurozone to a 0.1% contraction for 2012, and investors reacted ruthlessly to Lucas Papademos’ Greek exit contingency plan comments. The Euro is now trading around 1.2660, after beginning yesterday’s session above 1.2800.
Data Released Today
- Sterling, Euro and US Dollar exchange rate news – The Pound fell below $1.60 against the U.S Dollar for first time since April 1st yesterday
- Sterling Euro US Dollar Foreign Currency Forecast – The pound gained over 0.5% against the euro yesterday on the back of higher than expected inflation data
- Foreign Exchange Rate Forecast – The Pound initially fell against the Euro exchange rate
- Pound Sterling, the Euro and US Dollar exchange rate News – The Pound fell from the highest level in two months against the US Dollar
- Sterling Euro US Dollar Foreign Currency Forecast – The pound fell against all 16 of the most actively traded currencies