The Pound failed to make any significant ground against any of the majors yesterday as comments from policy-makers at the Bank of England reduced demand for the Sterling currency.
BoE Chief Economist Spencer Dale said that an “expansion of quantitative easing is still on the table”, despite the encouraging uptick in British data over the past six months. Although, Dale’s comments suggest that the UK Central Bank still maintains a dovish bias, recent board meetings have suggested differently. Last Wednesday the BoE released the Minutes from its latest policy meeting showing that all nine policy-makers voted against further QE. In short: it is not incredible to suggest that the Bank of England will raise the asset purchasing target in the future, however, it is improbable.
BoE board member David Miles also made some dovish comments, describing a premature raising of interest rates as a “pretty catastrophic strategy”. Miles insisted that the Bank will not get carried away with recent improvements in the British economy and stated that Unemployment needs to decline sufficiently before the first rate hike will be announced. Miles also asserted that the UK storm would only act as a “tiny blip” on the radar with regards to its potential impact on UK GDP
The mildly discouraging comments from the BoE policy-makers added to a sense of disquiet among Sterling traders yesterday that originated from a disappointing CBI Retail Sales report. The Confederation of British Industry’s October survey showed that just 2% of businesses experienced an increase in sales volumes this month – far weaker than the 34% that witnessed improvement during September.
Sterling ended the day around a quarter of a cent lower against the US Dollar, half a cent down against the New Zealand Dollar and 0.1 cents down against the Euro.
The Pound struck a fresh 46-month high against the Canadian Dollar, but ended for the day slightly lower. Demand for the ‘Loonie’ is currently weak due to the disruptions in the United States, which contributed to the Bank of Canada’s decision to remove talk of raising interest rates from its latest Central Bank statement.
Later on today the Pound is likely to get a small boost from September’s Mortgage Approvals report, which is expected to print at a fresh post-crisis high of 66,000.
The rest of the day’s economic releases are due to take place in the US, where Advance Retail Sales are predicted to have stagnated at 0.0% during September and Consumer Confidence is set to have fallen from 79.7 to 75.0 in October. The soft releases are likely to have a negative impact on the US Dollar.
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