Sterling initially struggled yesterday following an unsourced report in The Daily Telegraph of the risks to Britain's AAA credit rating, but the pound still finished the day higher against the euro. Investors quickly realised that the report referred to comments made by Standard and Poor’s last month, with no additional news being reported yesterday.
The market switched their attention to the Bank of England minutes, with no major surprises coming there. The Monetary Policy Committee voted 8-1 to cut rates earlier this month, with a unanimous decision to ask the Treasury for the powers to boost money supply – it is now expected that the Bank of England will embark on the path of quantitative easing as of next month. However it was the single currency that was under pressure in the afternoon, with concerns mounting that the region’s banks will report increasing losses, especially considering the economic plight in eastern Europe at present and the affect this may have on parent companies based in western Europe.
There are no major announcements due in the eurozone today, whilst money supply data is released in the UK this morning.
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