GBP/USD Weaker After BOE Minutes Show No Votes For Rate Hike

January 21, 2015 Share Print 0

The pound weakened as details of the Bank of England’s first unanimous decision on monetary policy since July damped the outlook for higher interest rates that would support the currency.

Sterling fell against all of its 16 major peers after policy makers Martin Weale and Ian McCafferty dropped their call for an interest-rate increase as plunging oil prices raised the risk that low inflation would become entrenched. Separate data showed wage growth in the three months through November was less than analysts estimated. U.K. government bonds advanced, with 30-year yields dropping to a record low.

“The two hawks have rejoined the broader dovish camp within the MPC and that’s going to keep sterling under pressure,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “Although there are some improvements in some of the labor-market data, the pick up in the wages were disappointing; not really gaining the momentum the market has been looking for.”

The pound weakened 0.5 percent to 76.67 pence per euro at 12:58 p.m. London time. The U.K. currency reached 75.96 pence per euro on Jan. 16, the strongest level since February 2008. Sterling fell 0.2 percent to $1.5120.

via Bloomberg

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.