UK Pound Gains as BOE Prepares to Wind Down Stimulus
UK pound is seeing gains again today, heading to highs not seen for 19 months against the euro. Sterling is also up against the US dollar as Forex traders look for signs that the BOE is ready to raise rates. With no more quantitative easing in the immediate future, pound is getting a boost, even though the general market tenor is one of risk aversion.
The Bank of England recently released the minutes of its last Monetary Policy Committee meeting, and they show that the BOE is ready to roll back its stimulus efforts. Adam Posen, who has been asking for more stimulus in meetings, noticeably didn’t in the last meeting. Additionally, it appears that the BOE policymakers discussed inflation, and concerns about keeping it under control.
While this doesn’t mean that the next BOE meeting will result in an interest rate hike, it does indicate that quantitative easing is no longer deemed necessary by monetary leaders in Great Britain. The result is helping the UK pound on the currency market, since it seems to indicate that at some point a rate hike will be in order, and that further efforts to weaken the sterling in the name of economic stimulus aren’t on the table.
At 14:38 GMT EUR/GBP is down to 0.8186 from the open at 0.8191. GBP/uSD is higher at 1.6054, up from the open at 1.6023.
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