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Conversion Rate News: Pound Sterling GBP Forecast to Climb on Bank of England MPC Miles? Interest Rate Remarks

August 19, 2015 - Written by John Cameron

GBP to EUR, USD Movement Forecast on UK Retail Sales



The British Pound fell against the Euro yesterday as the Greek bailout was approved by Germany. However, the asset advanced on the US Dollar as the minutes from the last Federal Open Market Committee meeting were seen to support borrowing costs being adjusted in December rather than September. Today the UK is set to publish its latest retail sales numbers. A strong consumer spending print would be Pound-supportive.

Earlier...

BoE Supports Interest Rate Increase: Pound Sterling Exchange Rate Gains Today



The Bank of England (BoE) monetary policy committee has only nine members, so when one of them speaks, the market listens. One of the nine, Kristin Forbes, warned earlier this week of the dangers of maintaining UK interest rates at their current record low of 0.50% for too long and predicted that Base Rate will be on the march Northwards before the headline CPI rate of domestic inflation hits the government’s 2.0% target level. Her prophesy that a delay could derail the tentative British economic recovery helped to support the Pound Sterling (currency : GBP) during early trade this week and the UK unit enjoyed a further boost earlier today following comments from another policy maker.

GBP to EUR, USD Conversion Rates Rally after UK CPI Rises



This time it was Professor David Miles who commented last night that UK interest rates will rise ‘pretty soon’.

Miles attempted to place a positive spin on the tightening of monetary policy, stating that, ‘I don't think it's anything to worry about, it's a sign of health’. He went to expand on this theme, stating that, ‘within the UK economy consumer confidence is strong, corporate confidence is pretty strong and the financial system is operating near normal now,’ before forecasting that domestic rates will gradually edge up to a new normal range between 2.5% and 3.0% over coming years.


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British Pound to Euro achieves Best Conversion Rate of 1.42 before UK Retail Sales



Investors holding Sterling-denominated assets were pleased with Miles’ interjection and they pushed the UK unit higher against both the euro (currency : EUR) and the US Dollar (currency : USD). The GBP EUR exchange rate topped out at an intraday high of 1.4209 GBP EUR earlier, while GBP USD spiked to 1.5697 earlier. The only limiting factor to Miles’ comments was the fact that he has now cast his last vote on the committee. His replacement will register their first vote at the September meeting and they are by no means guaranteed to share Miles’ relatively hawkish view on policy.


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