Pound to Euro, US Dollar exchange rate: The Pound to Euro exchange rate slipped back slightly

The Bank of England's minutes report revealed that monetary policy committee members voted 9-0 against reducing the current record low interest rate of 0.50%. The Bank of England’s minutes report revealed that monetary policy committee members voted 9-0 against reducing the current record low interest rate of 0.50%.

Headlines

BoE hold interest rate at 0.50% – QE remains at £375 billion.
ECB scheme tantamount to a pact with the devil – according to Jens Weidmann.
GBP/USD stalls – pulled down by slowing EUR/USD.
New Zealand GDP grows 0.6% – reduces likelihood of rate cut.

Sterling

The Bank of England’s minutes report revealed that monetary policy committee members voted 9-0 against reducing the current record low interest rate of 0.50%. The MPC also decided to maintain their current asset purchasing target of £375 billion.

The results fell in-line with the market consensus but policymakers did have one spanner to throw into the works: “Some members felt that additional stimulus was more likely than not to be needed in due course.” The statement suggests further bouts of quantitative easing could be on the cards later on in the year, perhaps as early as November when the current scheme expires. An interest rate cut remains very unlikely in the near future.

Euro

Jens Weidmann, head of the Bundesbank, and bond-buying sceptic, has likened the European Central Bank’s new intervention scheme to making a pact with the devil. Weidmann warned that erasing debts with artificially created money, whilst conducive to growth initially, will eventually lead to inflation and rapid currency depreciation as the monetary system is destroyed. He compared the ECB’s latest crisis catching method to the fall of the Holy Roman Empire in Goethe’s classic tragedy Faust.

One catch to Weidmann’s macabre prophetic statement is that the ECB will not be called into action in the sovereign bond market unless Spain or Italy make a formal request for aid. However, since Mario Draghi unveiled his bond-buying programme yields have fallen on Italian and Spanish government debt. Due to the potentially catastrophic consequences of further public spending cuts, in both countries, neither government is keen to call on the ECB/ESM for help. It seems that leaders in Italy and Spain are content to ride the latest wave of optimism for as long as possible, but all things considered Spanish Prime Minister Mariano Rajoy is expected to initiate the debt relief scheme at some point in the near future.

The Pound to Euro exchange rate slipped back slightly during the day by 0.3 cents.

US Dollar

The US Dollar has found itself plummeting at an alarming rate since the Federal Reserve compromised the currency’s value by announcing a new bout of quantitative easing measures. However, with the Euro / US Dollar rate retracting slightly as investors paused to re-evaluate the situation, the Pound was also subject to mild selling and GBP/USD fell by as much as 0.6 cents, to as low as 1.6185 on the day.

US Building Permits outperformed expectations by posting a figure of 803K in August, US Housing Starts improved by slightly less-than-anticipated in August at 750K, and US Existing Home Sales rose to 4.82M. However the three ecostats had a minimal affect on the Pound to US Dollar exchange rate.

Canadian Dollar

Once again the Pound traded sideways without decisive direction against the Canadian Dollar yesterday. GBP/CAD finished the day just 10 pips lower than its opening levels despite Crude Oil striking a 6-week low due to growing supplies, which would usually have a bearish affect on the ‘Loonie.’

Australian Dollar

The Australian Dollar appreciated by just under a cent against the Pound yesterday as the commodity-correlated currency was positively impacted by the Bank of Japan’s unexpected decision to expand its monetary easing scheme by a further 10 trillion Yen, which works out at around $128 billion, or £78 billion. The Japanese stimulus was interpreted as supportive of further growth in the Asia-Pacific region and endeavoured to improve sentiment for the Antipodean currency.

New Zealand Dollar

Chances of an interest rate cut in New Zealand were greatly decreased yesterday as the country’s second quarter growth figures beat expectations of a 0.4% increase by growing to 0.6%. The New Zealand GDP results boosted the annual figure up from 2.4% to 2.6% and bolstered the ‘Kiwi’ Dollar’s appeal as a high-yielding currency. Subsequently the Pound shed a cent against the New Zealand Dollar within 15 minutes of the announcement.

Data Released Today

07:00 EUR German Producer Prices (YoY) (AUG)

09:00 EUR Euro-Zone Purchasing Manager Index Manufacturing (SEP A)

09:30 GBP Retail Sales (YoY) (AUG)

13:30 USD Initial Jobless Claims (SEP 15)

15:00 EUR Euro-Zone Consumer Confidence (SEP A)

15:00 USD Leading Indicators (AUG)

Related posts:

  1. Pound to Euro, US Dollar exchange rate: The Pound broke back above 1.2600 against the Euro
  2. The Pound briefly slipped back under 1.21 against the Euro
  3. Pound to Euro, US Dollar exchange rate: The Bank of England surprised absolutely nobody yesterday as they kept their benchmark interest rate at 0.5%
  4. Pound to Euro, US Dollar exchange rate: The Pound is being dragged down against the Euro
  5. The Pound is trading slightly down from yesterday at 1.208 against the Euro exchange rate

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/aBEAm52CqvA/

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