The Pound has continued its recent recovery against the Euro and the US Dollar following the double bout of good news released earlier this week of better than expected UK GDP and S & P’s UK credit rating upgrade to AAA Stable. The Pound is now trading near 1.15 against the Euro and near 1.59 against the US Dollar on the interbank market.
Following the release of minutes from the Bank of England Monetary Policy Committee (MPC) and the Government’s Spending Review, the Pound has remained relatively stable near its current levels in the region of 1.13 against the Euro and 1.57 against the US Dollar.
The Bank of England Minutes confirmed that there was a three way split in the nine member MPC October meeting. Seven members voted to keep interest rates and quantitative easing (QE) on hold, whilst one member voted for a 0.25% interest rate hike, whereas Mr Posen voted for a £50 billion extension of QE.
The minutes indicated that whilst the clear majority of MPC members did not see the case for further QE at present, they did indicate that the chance of further QE in the future had increased. Going forward the prospect of further QE and low interest rates will continue to weigh on Sterling’s value.
During the UK Spending Review, Chancellor George Osbourne unveiled the largest UK spending cuts since World War II. Departmental budget cuts averaged 19%, which was less severe than the 25% cuts expected, largely thanks to an additional £7 billion found in savings to the welfare budget. The Spending Review aims to cut £81 billion from public spending over four years.
The exchange rates mentioned in the above blog are based on the current interbank rates. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.