Sterling boosted by Bank of England Minutes

The Pound, which sharply fell yesterday, has received some support from the latest set of Bank of England minutes released this morning. The minutes reveal that policy makers were united in their vote to maintain bond purchases at their current level. This signaled that the perceived threat to the economy is not sufficient enough to warrant extending quantative easing. Sterling was trading at the mid-market rate of 1.5642 against the Dollar and 1.2138 against the Euro at 10.45 am this morning.

Pound Sterling – UK Markets

This morning’s release of the Bank of England minutes has so far caused some positive movement in Sterling after it dropped to its weakest level in three weeks throughout yesterday. Yesterday’s fall was due to the negative reaction to the year on year inflation statistics which came in well above the 2 percent target at 3.1 percent. The biggest concern has been food inflation which is up 3.4 percent annually. Investors have looked favorably on this morning’s minutes from the last Bank of England policy meeting with Sterling receiving an instant boost. The minutes reveal that once again Andrew Sentence was the only policy member to vote for an interest rate rise, and that the vote to maintain the bond purchasing programme at 200 million Pounds was unanimous.

US Dollar – US Markets

The US Dollar clawed back some ground on the Euro yesterday and overnight but has sharply fallen again this morning, also losing out to the Pound. Yesterday’s climb came after a surprisingly positive report on US industrial production which showed growth of 1.1 percent between June and July. This has however been a lone piece of positive news in a wealth of negative data releases so may not have a lasting impact. US housing starts and building permits were more in line with the downbeat nature of recent US news, both coming in below expectations. Today sees mortgage application and crude oil stocks figures released.

Euro – European Markets

The Eurozone is experiencing mixed data. Yesterday’s successful Irish and Spanish debt auctions gave some strength to the Euro. A report on the German economy however revealed that expectation for growth fell sharply for August. This morning has bought more positives, as construction output has come in well above expectations with the Euro rising against the Dollar but not managing to make gains on the Pound and outweigh the Sterling rise bought on by the Bank of England minutes.

Other Currencies – Highlights

The Japanese Yen has continued to make gains and there seems to be no likelihood that action will be taken to curb its advances which puts pressure on other currencies. The Australian Dollar declined against most of its major counterparts after reports such as a data release on job availability for skilled workers showed declines. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.