British Pound Sterling | Currency News Views and Outlook
British pound finally shows some fighting spirit - The big news this afternoon is that there is no news
- Category: British Pound Sterling
- Published on Thursday, 02 August 2012 12:06
- Written by Will Peters
Investors happy to snap up some cheap sterling in the wake of Bank of England non-decision.
The pound sterling (Currency:GBP) is looking a little more confident as we head into early afternoon trade in London.
The pound euro exchange rate is 0.3 pct in the red at 1.2672.
The pound dollar exchange rate is 0.26 pct higher at 1.5573.
The big news this afternoon is that there is no news from the Bank of England on whether it wants to tweak the monetary policy controls at its disposal.
The decision was pretty much expected, but in the absence of any shocks it appears that investors are willing to snap up some cheap sterling.
Philip Rush, UK economist at Nomura, comments on the decision to do nothing today:
"With three-quarters of the current £50bn QE programme still to be unleashed, it was not surprising to see no new announcements on QE. Bank rate was kept on hold again, consistent with the Bank's guidance.
"We still expect a £25bn QE extension in November and no cut to Bank rate. We think the latter would be especially counterproductive, but we note the increased probability that it happens regardless."
Alan Clarke at Scotia Bank wonders why we should wait till the end of the year before increasing the money supply yet further:
"The consensus expectation was that QE will be expanded in November. Ours was – why wait? Why wait when next week’s Inflation Report projections are likely to provide a compelling case for further policy ease?
"We expect next week's Inflation Report to show a slashing in the Bank's projections, with a GDP growth projection for 2012 close to zero and a 2-year ahead inflation projection around 1% y/y."