Scarce Support for Rate Rise At Bank of England

The release of the Bank of England minutes for July have revealed that for the second month policy maker Andrew Sentence was alone in voting for a rise in interest rates with the other seven members voting to keep interest rates at the record low of 0.5 percent.

Pound Sterling – UK Markets

Sterling was trading at 1.5277 against the US Dollar and 1.1911 against the Euro at 11am this morning. Andrew Sentence has spoken publicly over the course of the last month about his first decision in June to vote for an interest rate rise in order to curb inflation and he has repeated the move again in July revealed by this morning’s minutes. Any further support at the Bank of England for an interest rate rise alongside Andrew Sentence may have shored up market confidence in the UK recovery but it has emerged that again his was the only vote in favour of a rise. This morning’s news is therefore unlikely to help Sterling following yesterday’s poor public finance data as markets are forced to focus on the UK’s fragile recovery. Friday’s GDP figures will also be significant.

US Dollar – US Markets

The US Dollar has lost out against the Pound and remains volatile against the Euro. The US has suffered yet another wave of poor housing figures with the current bleak data releases seeming relentless. Yesterday revealed that US housing starts fell more than expected to their lowest level in eight months. Tomorrow sees the Labor Department’s report on initial jobless claims which are expected to rise and the National Association of Realtors’ report is expected to show that existing home sales dropped in June. US Treasury officials are reviewing candidates to run the new Consumer Financial Protection Bureau which will be housed at the Federal Reserve and is being set up as part of President Barack Obama’s financial regulatory overhaul.

Euro – European Markets

The single currency has lost ground to the Pound since late last night following yesterday’s gains. There is greater focus mounting on the results of the stress tests on European banks on Friday as the credibility of the stress tests themselves is coming under increased scrutiny as well as speculation about the results being rife. The unresolved situation between the EU and Hungary regarding Hungary’s rescue package is also starting to make further waves. Hungary has upped its conflict with the International Monetary fund by cutting back their Treasury bill.

Other Currencies – Highlights

Demand for the Japanese currency in the wake of poor news on the Euro and the US Dollar has caused the Yen to rise. Australia’s Dollar fell against the US Dollar and the Yen on speculation a slowing global economy will prompt the central bank to keep interest rates unchanged next month. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.