Poor start to the day for GBP
Big events of the day are the release of the Bank of England (BoE) minutes from their last rate decision meeting, which have already been released. UK GDP figures for Q4 2011 and the US interest rate decision this evening (UK time).
Whilst there are likely to be no surprises with the US certain to keep interest rates on hold, effectively at 0.25%, the press conference always provides scope for the Chairman words to move the markets.
The minutes of the BoE MPC meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the BoE is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the GBP. The member of the committee voted 9-0 in favour of keeping interest rates on hold at 0.5% but there were some hints that some members feel that further Quantitative Easing (QE) will be needed in the coming months – this has had a negative effect on GBP (particularly GBP/USD and GBP/EUR).
Q4 2011 GDP came in slightly worse than expected but only fractionally – this has had a slightly negative effect on GBP but coupled with the further pressure on GBP with the prospect of further QE – Sterling has had better starts!
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