Good Morning. The pound gained yesterday on good PMI data, however good data from the Eurozone cancelled this out, and so Pound vs Euro rates remain steady at €1.10. Rates for other currencies rose slightly. At 08:30am rates are as follows:
- GBP/EUR 1.1010
- GBP/USD 1.5032
- GBP/AUD 1.6695
- GBP/NZD 2.1804
- GBP/CAD 1.5507
- GBP/CHF 1.6108
- GBP/JPY 132.81
- GBP/ZAR 10.241
- EUR/USD 1.3650
PMI Data
A purchasing managers' survey showed Britain's services recorded their strongest expansion in more than three years in February. Analysts said the figures lifted expectations the UK economy may be recovering faster than previously thought, lessening concerns that Britain could slip back into recession.
Earlier, a Nationwide Building Society survey also showed British consumer confidence hit its highest in two years in February. Given how volatile sterling has been recently, people don't want to be caught on the wrong side," said RBS currency strategist Paul Robson.
The pound's recent falls came as UK opinion polls showed the opposition Conservatives' lead was shrinking. This increased the risk that no one party will have a clear majority after the election, potentially complicating efforts to bring down the UK's spiralling deficit.
Bank of England & European Central Bank Interest Rates
Investors were also cautious ahead of a Bank of England policy decision today, although the central bank is not expected to make any change to interest rates or to its quantitative easing policy. Both the EU and UK announce their interest rates today. We expect rates to be left on hold, but if there are any comments from the BoE regards more Quantitative Easing, then the pound will likely drop.
Under QE, the Bank has bought assets in order to boost lending to businesses and individuals by commercial banks. But the Bank has said that the full effects of QE will take more time to filter through to the economy.
Another reason why the Bank is unlikely to increase QE now is rising inflation. The latest figures, released last month, showed prices rising by 3.5% in January, the fastest annual pace for 14 months. This compares with 2.9% the previous month.
The decisions are at 12:00pm (BoE) & 12:45pm (ECB) - you can keep track of developments through the day by following us on Twitter.
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