Carney undeterred by Chinese slowdown
The Pound was boosted by the Bank of England (BoE) monetary policy statement yesterday. The BoE opted to maintain interest rates at its existing record low, but its suggestion that the recent market turmoil in China will not affect the UK’s budgetary policy path should help Sterling moving forward.
The single currency continued to hold its own against the Pound yesterday, in spite of the BoE’s assertion that UK lending rates may be on their way up sooner rather than later. The Euro continued to bask in the glory from Tuesday’s better than expected Eurozone GDP data which strongly suggested that the European Central Bank’s Quantitative Easing programme is beginning to benefit mainland Europe’s economy.
Today may prove pivotal for the Greenback as this afternoon’s Michigan Confidence Survey may provide investors with direction of a tightening of US monetary policy. If this data comes out above the forecasted 91.2, this should encourage market participants’ outlooks regarding an interest rate increase from the Federal Reserve next week. Anything less than the 31.2 and we could see the US Dollar lose ground against a basket of currencies.
In other currency news – it’s not been looking good for the NZD following the midweek interest rate cut from the Reserve Bank of New Zealand (RBNZ). The Kiwi central bank’s proposal that further rate cuts could follow could upset the NZD further, especially if the economic news flow from China continues to dishearten. The prognosis for the Kiwi isn’t looking good as the Pound has strengthened by just over 8% since the start of July this year.