Pound slides against Euro and Dollar after BoE minutes
The Pound fell to fresh multi-month lows against the Euro and the Dollar after Bank of England minutes signalled a greater likelihood of more monetary stimulus. The minutes unexpectedly showed three out of the nine BoE policymakers voted for an increase in asset purchases under the bank’s quantitative easing programme. They also showed the Monetary Policy Committee considered cutting interest rates. Meanwhile, official data showed that the number of people claiming unemployment benefits in the U.K. declined more-than-expected in January. The study, which comes as Office for National Statistics figures are today expected to show employment rose substantially in the final quarter of last year.
On the other hand, the Euro rose for a second day versus the dollar before data that economists said will show consumer confidence in the 17-nation currency bloc improved. The European Commission will say today that its index of consumer confidence improved. Investor confidence in Germany, the region’s biggest economy, jumped to a three-year high. Europe’s biggest economy is likely to rebound quickly from a fourth-quarter contraction. Survey participants also shrugged off inflation concerns, amid record low interest rates from the European Central Bank, and do not regard the appreciation of the euro as a worry.
On the FX markets, the GBP/USD is falling massively at the time of writing as the BoE meeting minutes surprise investors with the 6−3 vote to keep QE unchanged at £375B. Governor King, Fisher and Miles were in favor of an increase of £ 25B. The GBP/USD has fallen by 100 pips already, from 1.5440 to 1.5340. The EUR/GBP has rallied from 0.8690 to as high as 0.8757, and it’s not safe to say the rally has stopped. UK labor data shows a higher ILO unemployment rate from 7.7% to 7.8%. However, there were 12.5K less claimants in January, instead of -5K as expected, pushing the rate lower from 4.8% to 4.7%.
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