Sterling fell to a one week low against the US dollar to bottom out at $1.5797 for the day.
Downbeat comments from David Miles, an MPC member, today helped to fan more flames about monetary easing for the UK economy. In a statement this morning, Miles said that ‘quantitative easing remains a potentially powerful tool and one that we might come to use.’ These comments came after his Dublin speech in which Miles outlined the difficulty policy makers face at the moment of not doing enough to curb inflation and being sure not to tighten policy too soon, killing the fragile recovery. The change in sentiment from these two statements could mirror the increasing concern within the Bank of England about the state of the UK economy.
The key data today was UK inflation, but the figure, 3.1%, was in line with expectations had had little lasting impact on price movements. The level has now been above the Bank’s 2% target for 10 consecutive months but the BoE remain of the stance that it will fall back over the medium term.
In other news, declining global equity markets have added to risk aversion enabling the greenback to make a slight comeback along with gold hitting yet another all time high currently trading over $1350 per troy ounce.
