Wednesday, 23 September 2009

Pound / euro pairing is holding relatively steady as investors await the MPC minutes

In a muted day’s trading in the build up to the MPC minutes, the pound made marginal gains, buoyed by rallying global equities.
  • Sterling initially hit a fresh 5-month low against the single currency yesterday at 1.1012, driven by euro strength against the dollar and underlying bearish sentiment against the pound.
  • Perceptions that the BoE will remain behind its counterparts in ending their loose monetary policy are expected to keep downward pressure on the pound in the short term.
  • Some analysts have noted that the pound does offer long-term value at current levels, but an extremely dovish BoE has undermined investor confidence, keeping the currency low.
  • In the afternoon however, the pound was able to reverse its losses and advance 0.2% as rallying equities supported risk appetite.
  • Trading this morning between this pair has remained subdued, with investors anxious of taking positions before the Monetary Policy Committee’s minutes are released at 09:30BST.

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