Pound Slides After Bank Of England Minutes

Pound Slides After Bank Of England Minutes




The pound edged lower against its major rivals following the release of Bank of England's latest monetary policy meeting minutes, at which two of the 9-member monetary policy committee favored for an expansion of quantitative easing.
The Bank of England retained its quantitative easing unchanged at GBP 325 billion through a split vote as two members preferred a GBP 25 billion increase in the programme, the minutes of the meeting showed today. All members voted to retain a record low 0.5 percent interest rate at the meeting, which was held on March 7 and 8.
"The Committee judged that the recent data had evolved in line with its expectations and that there had been little change to the balance of risks to UK activity and inflation," the minutes revealed.
Seven members voted to retain QE at GBP 325 billion, while David Miles and Adam Posen sought to increase the size of the asset purchase programme by a further GBP 25 billion to GBP 350 billion. They continued to think that a larger monetary stimulus was warranted to reduce the risk that persistently weak growth would damage the future supply capacity of the economy.
Meanwhile, the UK Public sector net borrowing, excluding interventions, rose to GBP 15.2 billion, the Office for National Statistics (ONS) said today. The figure was almost double compared to the corresponding period last year, at GBP 8.9 billion. Analysts had forecasted GBP 8 billion.
The European bourses are trading mostly in positive territory after the Greek Prime Minister Lucas Papademos secured approval for 130 billion euro aid package with a majority of votes, 213 out of 300, in favor of the new bailout. Without the bailout deal, Greece was facing a messy default which European leaders feared would affect the entire euro area.
Thus far, the U.K. FTSE 100 index inched up 0.24 percent, France's CAC-40 index climbed to 0.44 percent and Germany's DAX jumped 0.24 percent.
The pound shed by more than 40-pips against the Swiss franc following the minutes, sending the pair to an 8-day low of 1.4413. The next likely support for the pound-franc pair is seen around the 1.4320 level.
Against the euro, the sterling eased almost 25-pips around 5:30 am ET, hitting an 8-day low of 0.8372 with the pair targeting support zone around the 0.8410/20 area.
Germany's leading economic indicator increased for the second straight month in January, data from a survey by the Conference Board showed today.
The leading economic index increased 0.3 percent from the previous month to 103.8 in January, faster than the 0.7 percent growth recorded in December.
At the same time, the coincident economic index, which measures the current economic situation, rose 0.3 percent to 106.8 during the month.
The pound also fell sharply against its US counterpart, with the cable losing almost 0.5 percent to reach as low as 1.5847 before leveling off around 5:35 am ET, from Asian session's 3-week high of 1.5925. The next support for the cable is seen around the 1.5820 level.
The British currency also eased to the 133.0 level against the yen after having touched above the 133.50 level earlier in the session for the first time since June 2011. The next likely downside target level for the pair is seen around the 132.30 level.
Japanese all industry activity declined more than expected in January due to a contraction in the tertiary sector, data from the Ministry of Economy, Trade and Industry showed today.
The all industry activity index dropped 1 percent month-on-month, reversing a 1.6 percent gain in December. The decline exceeded the expected fall of 0.7 percent.
On a yearly basis, all industry activity dipped 0.1 percent after logging 0.2 percent drop in December.


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