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Conversion Rate News: Pound Sterling GBP Forecast to Surge on Bank of England Commentary

September 10, 2015 - Written by James Fuller

BoE Meeting Minutes Cause Pound Sterling (GBP) Exchange Rate Volatility Today

The Bank of England’s monetary policy committee stole the headlines in the world currency markets this afternoon with its announcement that UK interest rates will be maintained at their current record low of 0.50% for another month at least.

Once again, the decision was not unanimous, with one member of the nine-member board – Ian McCafferty – voting for an instant hike. In most analysts’ eyes, this outcome was not unexpected, however, the BoE’s commentary which accompanied the decision was judged by market insiders to be more go-ahead than the consensus expectation. The minutes revealed that the policy committee believed that, ‘global developments do not as yet appear sufficient to alter materially the central outlook described in the August Report,’ suggesting that Britain’s Base Rate will be on the march Northwards sooner rather than later.

Vote Split 8:1 But 2016 Interest Rate Forecasts Lend GBP Support against EUR, USD

The minutes went on to assert that the British economic landscape was continuing to improve, noting that, ‘domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence.’ Predictably, support for the Pound strengthened following these words.

However, the message from the Bank’s MPC was far from universally positive; the memos of this week’s BoE get-together went on to make mention of the, ‘greater downside risks to the global environment merit close monitoring for any impact on domestic economic activity.’

British Pound to New Zealand Dollar GBP-NZD Exchange Rate Close to Five-Year Best Today

The suggestion that policy tightening in the UK may be close at hand helped the Pound Sterling (currency : GBP) push forward against most of the other sixteen most actively traded global currencies, with the GBP USD exchange rate breaking higher from this morning’s low of 1.5336 to touch an intraday high of 1.5449 a short time ago. Elsewhere, the Pound had been languishing down in the 2.4200s during early trading, in spite of yesterday evening’s decision by the Reserve Bank of New Zealand to cut its Official Cash Rate; however, the Bank of England’s commentary sent GBP NZD spiralling back up into the 2.4500s once more.

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