by Adam Solomon
Sterling / Euro and US Dollar
The Pound declined heavily against all of the 16 most actively traded currencies this morning, after the minutes from the Bank of England’s last policy meeting showed that only two members voted to increase interest rates in June. The chief economist Spencer Dale and policy maker Martin Weale kept up their recommendation for an immediate 25 basis point increase to combat inflation, which has risen at the fastest pace in more than two years.
Andrew Sentance left the MPC on 31st May and his replacement Ben Broadbent seems to have adopted a more dovish stance, voting to keep rates unchanged at 0.5%. The prospect of UK rates remaining at a record low for the foreseeable future has weakened the Pound. The UK currency traded down towards 1.12 against the Euro and 1.6150 versus the Dollar.
Sterling also sank below 2.00 against the New Zealand Dollar and further losses appear likely in the short-to-medium term. The Pound may trade under 1.10 against the Euro over the coming month, with the ECB preparing to raise the benchmark lending rate in Europe on the 7th July.
EU 15:00 – Flash Consumer Confidence (June)
U.S 17:30 – FOMC Rate Announcement
U.S 19:15 – Bernanke Press Conference