Down, down, down for sterling | Smart Daily Currency Note
GBP/USD – 1.5198
The bad news keep on coming as sterling fell sharply yesterday, dropping to a 15 month low against the euro and its lowest since June 2013 against the US dollar. This happened after the Bank of England (BOE) minutes showed that three members on the Monetary Policy Committee (MPC) voted for expanding the current levels of quantitative easing. Furthermore the minutes revealed that there had been discussions about potentially cutting interest rates; although all members voted against a cut in interest rates. Unemployment data came out with a mixed signals. The number of people claiming unemployment benefits dropped by more than expected, but the jobless rate came out worse than predicted with a unemployment rate now reaching 7.8% in January. Out today we have the latest figures on Public Sector Net Borrowing and Industrial Order Expectations from Confederation of British Industry (CBI). Plenty of scope for further bad news for sterling. Not that long ago we were wondering if sterling would fall below 1.20 against the euro – under 1.14 seems very likely now! Call in today for the latest news and a live rates from our traders.
The US dollar performed extremely well yesterday reaching fresh eight month highs against sterling. Poor inflation data from the US as well as declining housing starts promoted risk aversion in the global markets. Other data released yesterday showed that building permits increased at their quickest pace since June 2008. Yesterday evening we saw further dollar strength following the release of the latest Federal Open Market Committees (FOMC) meeting minutes. The minutes outlined that the Federal Bank should be prepared to vary the pace of quantitative easing, thus normalising monetary policy – a sign that the central bank is looking at tightening monetary policy going forwards. Today we see the release of core Consumer Price Index data (CPI), weekly unemployment claims figures, existing home sales data and the Philly Fed Manufacturing Index being released in the US. Call now for the latest news and updates.