The Pound Sterling Exchange Rate was in the region of 1.1426 against the Euro as of 10:29 am
Prior to the release of the Bank of England’s policy meeting minutes the Pound lost further ground against the Euro, heading for its lowest level against the common currency for 16-months.
Sterling also continued to trade within the region of a seven-month low against the US Dollar after tumbling to 1.5415 USD yesterday.
One currency analyst commented: ‘Sterling is looking down the barrel of a gun right now. There’s nothing really to support it. People are going to be looking very carefully at the minutes for any sign of Sterling weakness.’
After the policy minutes were released Sterling was blasted backwards, plunging by over 0.6 per cent against the US Dollar and hitting an over 15-month low against the Euro. The Pound was trading in the region of 0.8748 Euros within an hour of the minute’s publication.
The minutes revealed that several high profile members of the central bank’s Monetary Policy Committee, including BoE governor Mervyn King, unsuccessfully tried to convince their fellows of the need for more stimulus. King, along with David Miles and Paul Fisher, felt that increasing the target for bond purchases to 400 billion Pounds would be beneficial. However, the other six members of the MPC vetoed this proposal.
The officials did consider other stimulus options including an additional interest-rate cut, while the minutes implied that the MPC could start looking at more targeted measures to boost the UK economy.
In the minutes the MPC stated: ‘Growth remained subdued and the economy continued to face a number of headwinds. But the committee’s asset purchases had already impacted a substantial monetary stimulus. A case could be made that, if further stimulus was required, policy interventions more targeted at particular frictions or market failures in the economy were likely to be more effective in current conditions than further asset purchases’.
Although the negatively revised UK inflation outlook is a concern, the MPC highlighted that attempts to reduce the rate too rapidly could prove detrimental to economic recovery.
The committee stated: ‘The degree of slack in the economy, and the likely positive response of supply capacity to increased demand, meant that higher output growth would not necessarily lead to any material additional inflationary pressure. [Further quantitative easing] could help the process of rebalancing the economy, and avoid potentially lasting destruction of productive capacity and increases in unemployment.’
In more positive news, UK employment enjoyed an unexpected surge in January as the number of jobless claims fell by 12,500 from December, over twice the figure forecast.
Economists predicted that unemployment claims would drop by 5,500.
The Office for National Statistics report showed that during the fourth quarter of last year the number of people in work increased to 29.7 million – the most on record.
Meanwhile unemployment as measured by International Labour Organisation methods dropped to 2.5 million, a decline of 14,000, and employment made its biggest gain since mid-2012, surging 154,000.
The claims rate held at 4.7 per cent.
As economist Samuel Tombs asserted: ‘It has been a bright spot among the data in the last year or so. The employment surveys have been on an improving trend, suggesting there’s further gains in employment ahead.’
However, Tombs added: ‘There’s reason to expect this strong trend to continue over the next few months but over a longer horizon we’re sceptical it can be maintained.’
And with weekly pay growth slowing by 1.4 per cent in the fourth quarter, regular pay growth at the lowest rate for over 2 ½ years and inflation sticking at 2.7 per cent, it certainly isn’t all good news, and the risk of an unprecedented triple-dip recession is still present.
Current GBP Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading at 1.1426
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trading at 1.5320
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trading at 1.4806
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trading at 1.8263
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trading at 1.5525
The Pound Sterling to Emirati Dirham (GBP/AED) exchange rate is currently trading at 5.6260
The Pound Sterling to Swiss Franc (GBP/CHF) is currently trading at 1.4093
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is currently trading at 142.9800
These exchange rates were correct as of 10:29 am