Good Morning. Sterling fell against the Euro again yesterday, after Bank of England policymakers again voiced the fact there is likely to be more quantitative easing. BoE Monetary Policy Committee member Adam Posen said the central bank would very likely expand its quantitative easing programme in the months to come. The news has weakened the pound, and rates @ 08:30am are as follows:
The comments by the BoE has kept sentiment towards the pound very negative, on the view that a weak economy will keep UK monetary policy very loose for many months to come. This also means it's likely our interest rates will stay at their record low of 0.5%.
- GBP/EUR 1.1360
- GBP/USD 1.5326
- GBP/AUD 1.7237
- GBP/NZD 2.2200
- GBP/CAD 1.6170
- GBP/CHF 1.6623
- GBP/HKD 11.900
- GBP/ZAR 11.921
- GBP/JPY 136.89
- EUR/USD 1.3488
As other economies recover and start to raise their interest rates, it's likely the pound will lag behind other currencies and so the outlook for Sterling exchange rates is very poor. The BoE's dovish stance contrasts with that of the USA, which raised its discount rate last week as part of its strategy to exit the global financial crisis.
Recent weak UK economic data, such as retail sales and the deficit has kept the pound on the back foot, causing it to lose over 10 cents against the US Dollar in a month. Investors are also jittery about the prospect that no one party will win a majority in an election due by June as this could prevent any incoming government from making the tough decisions needed to reduce UK debt.
There's more on what the Shadow Chancellor George Osbourne will do on Stephanie Flanders BBC blog here. Worryingly, it touches on the fact whichever government we end up with will likely want to keep the pound weak to encourage exports. This is not good news for those that need to convert Sterling to another currency.
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