GBP USD Exchange Rate Steady As Federal Reserve Hints At An End To QE

Modified: Thursday, 11 April 2013 08:54 BST - Written by David Woodsmith

STORY LINK GBP USD Exchange Rate Steady As Federal Reserve Hints At An End To QE

Yesterday’s session brought the release of the minutes of the most recent Federal Reserve monetary policy meeting in the US. The memos of the latest get-together of the world’s most influential central bank were released to the public ahead of schedule because the Federal Reserve had inadvertently sent the notes to congressional aides and trade bodies on Tuesday and did not want the public to be left in the shade.

The minutes of the Fed’s latest meeting show that support amongst US policymakers for America’s highly controversial Quantitative Easing programme appears to be waning. The minutes revealed that several members ‘thought that if the outlook for labour market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end.’ Such a blunt revelation that the US’s asset purchase scheme may be moving towards an end game is likely to prove supportive for the Greenback during coming sessions. However, analysts were quick to remind investors that the meeting took place on March 19-20th , before the release of March’s US Non-Farm Payrolls data, which showed a highly disappointing level of job creation in the states last month.

Meanwhile, the US’s protracted budget talks continue to fail to yield fruit. Yesterday’s announcement by US President Barack Obama that his latest Budget proposal includes increases to taxes on wealthier Americans and cuts in domestic benefit payments is unlikely to fool anyone. Obama knows that his proposals are highly unlikely to be passed by Republican lawmakers, meaning that they will fail to make it into the statute book. This was certainly the message from Republican Senate Leader Mitch McConnell who described the proposals as a ‘left wing wish list’. The ongoing impasse between Democrats and their Republican counterparts on a budget agreement is having the opposite effect on the Dollar to the rumours that the Fed’s QE programme may be coming to an end. The net effect saw the Pound Dollar exchange rate (GBP/USD) remain relatively static on the day. By the middle part of last night’s North American session, Cable was trading at 1.5318.

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