Skip to content

Run up to BoE interest rate decision to keep pound shackled

Pound: Sterling has dropped slightly this morning versus the dollar before the Bank of England announces an interest rate decision today. Earlier in the week we had seen the pound hit two month highs and against the euro we have seen gains more or less held as the single currency becomes the focus for market jitters. Analysts are expecting the BoE to keep interest rates unchanged today at a record low of 0.5% and also keep its bond purchase program, known as quantitative easing on hold at £200 billion. The pound has fallen three quarters of a percent to $1.6360 after hitting $1.6476 on the 1st Aug, the most since June 1st. We also saw a slight drop against the euro as we hit 1.1440 after hitting 1.15, the strongest since 31st. Yesterday we did see impressive gains for sterling versus the dollar after better than expected UK economic data was released in the form of UK PMI services, coming in at 55.4 from an expected 55.3. The services data is a big gauge for the British economy as services makes up around 75% of the economy. Data 12.00: BoE Interest Rate Decision expected un¬changed at 0.5%, Asset Purchase facility expected unchanged at £200B & MPC Statement.


Euro: Things don’t seem to be getting any better for the eurozone as global market pressure seem to constantly be looking to unleash their wrath on any country which shows an inability to service debt levels. Since the US managed to raise their own debt ceiling on Tuesday, Italy and Spain have now found themselves firmly in the spot light as bond spreads went above the 6% level, meaning that they have to pay even more to borrow money in international markets. This has kept the euro under pressure as investors shun the single currency for the typical safe havens such as the yen, Swiss franc, dollar and to an extent now the pound. Debt laden Italy is likely to default, but Spain might just avoid it, according to CEBR, the British think tank. It found that Italy will not avoid default unless it sees an unlikely big jump in economic growth. Its economy grew by just 0.1% in Q1 and further growth is expected to remain sluggish. Looking ahead to today's ECB interest rate decision, there is ex¬pected to be no change, but as always analysts will listen carefully to the following press conference for any signs of change in future rate movements. Data: 11.00: German Factory orders m/m –0.4% from 1.8%. 12.45: ECB Interest Rate Decision expected unchanged at 1.5. 13.30: ECB Press Conference.


Since the US managed to drag itself bank from the brink of its first ever default, its currency has been more or less trading on the back of other ‘Big Time’ global events rather than trading of its own back. There has of course been the dramatic fall in global stock markets which has led to the usual rally in the dollar as players shun high risk investments and return funds into safe haven currencies, giving the dollar a boost versus the pound and euro. Yesterday however the dollar fell against its UK counterpart as strong UK PMI Services data saw cable fall. Against the euro we have seen continued selling pressure for the single currency so EUR/USD has been moving in favour of the greenback. The big move in the last 24 hours however has been in USD/JPY as the currency pair moved over 3.5% in the dollars favour after Japan intervened in the currency markets. Data 13.30: Unemployment Claims 404k from 398k.


• Japan opted for a rare intervention in the foreign currency market on Thursday, curbing a strong yen that has undermined the recovery of its disaster –hit economy. After the government sold an unspecified amount of yen, the currency’s value fell 3.75% vs the dollar at 79.80 and 2% vs sterling at 130.67



For more information or to request a call back click here


GBP/USD                        1.6353

GBP/EUR                        1.1465

EUR/USD                        1.4256

GBP/JPY                         130.60

GBP/AUD                        1.5350

GBP/NZD                         1.9207

GBP/ZAR                         11.1042

GBP/CHF                         1.2733

GBP/CAD                        1.5611

GBP/SGD                        1.9821

GBP/THB                         48.70

GBP/HKD                        12.7563

red-down; blue-up (snap shot)

These rates are for indication purposes only


For more information or to get the latest spot rates contact:

John Paul Georgiou

Senior Foreign Exchange Broker

+44 (0) 20 7959 6917      


For more information