Sterling falls over BOE Stimulus
01 July 2016 by News DeskThe Pound fell against all major currencies after Bank of England Governor Mark Carney’s calls for a BOE Stimulus this summer.
Carney said UK’s departure from the EU has deteriorated the economic outlook substantially and that monetary easing via a BOE Stimulus will be required at some point in the near-term, according to today’s update from UK-based currency specialists TorFX
Australian Dollar – The Pound fell 150 pips against the ‘Aussie’ on the back of Mark Carney’s a BOE stimulus comments. For a brief moment the Pound Australian Dollar exchange rate saw a fresh 21-month low in reaction.
New Zealand Dollar – Stimulus bets sheared two cents from the Pound New Zealand Dollar exchange rate and the pairing reached a new three-year low on Thursday. GBP/NZD extended declines on Friday, falling a further 0.7%.
In UK, analysts are confident the Bank of England will cut rates and restart its quantitive easing program in August. Some believe that the rate cuts will start in next week’s policy meeting.
The Pound struggled under falling government bond-yields with two-year Gilts entering negative territory for the first time and ten-year yields continuing to plumb all-time lows under 1%.
Sterling fall over BOE Stimulus
Euro – The Pound Euro exchange rate fell yesterday afternoon as BOE head Mark Carney took to the lectern.
The UK’s GDP report printed favourably at 2.0% for the first quarter. Eurozone consumer prices rose 0.2% but neither ecostat had any marked effect on the pairing as the Brexit fallout is still swirling above our heads.
Economic growth within the UK is set to grind to a disheartening halt in the next six months and a fair few analysts predict that Britain will fall back into recession within the first quarter of 2017.
The Euro’s strength against the Pound will likely lead to falling consumer prices within the EU as UK imports become dirt cheap.
US Dollar – The Pound US Dollar exchange rate also felt the cool chill of Mark Carney’s calls for stimulus in the near future, falling by around a cent. The Bank of England’s willingness to attempt to fix the economic situation has stemmed building fears over both UK mainstream political parties being in turmoil. UK stocks rallied following Carney’s announcement as the Pound fell.
Canadian Dollar – Canadian data showed that GDP had risen for the first time in three months but the growth is not expected by analysts to continue.
The Alberta wildfires, failure of the Canadian teams to make it through the NHL playoffs and the risk-off interference from the UK’s Brexit are all set to exert downward pressure on the Canadian economy.
Canadian GDP rose 0.1% month-on-month in April and the Canadian Dollar rallied 120 pips against the wounded Pound.
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