British Pound (GBP) Exchange Rate Falls as Meeting Minutes show Unanimous Vote
The British Pound (GBP) will be highly influenced by the Bank of England’s (BoE) Meeting Minutes released on Wednesday, with Sterling currently trading against the US Dollar (USD) at 1.7086. The Pound has reached highs close to the 1.71 US cents mark at 1.7095, whilst trading at lows of 1.7056.
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An expert in the field, Kathy Lien stated: ‘The British Pound extended its losses against the US Dollar for the fourth consecutive trading day as investors cut their long positions ahead of the Bank of England minutes. The minutes are the most important event risk for Sterling this month because the mixed messages from policy makers have left investors confused on how serious the central bank is about raising interest rates in late 2014, early 2015.’
For now, it appears that interest rates are still out of reach for the UK economy, after releasing mixed bags of data in recent weeks. Thursday however will see the release of Retail Sales data, that is expected to reach 3.9% in June, the same as in May.
Moreover Friday will prove highly influential as the UK will reveal Gross Domestic Product data, currently forecast at 3.1%.
Wednesday’s minutes stated: ‘Given the likely persistence of headwinds weighing on the economy, when Bank Rate did begin to rise, it was expected to do so only gradually. Moreover, the persistence of those headwinds, together with the legacy of the financial crisis, meant that Bank Rate was expected to remain below average historical levels for some time to come.’
The Pound may dip after the minutes showed a unanimous vote to keep interest rates low, with no policy members suggesting the UK economy is strong enough to withstand rate hikes.
The minutes continued: ‘It remained the case, however, that the actual path for monetary policy, even after the first increase in Bank Rate, would remain dependent on economic conditions.’
The UK economy has been shrouded by interest rate decisions in recent months, with speculation amongst economists still circulating that November could see the first rate hike.
The USD/GBP exchange rate is presently trending at 0.5853—the session low. The GBP/USD currency pairing will be expected to fluctuate on Wednesday in light of the UK meeting minutes release.