Last week the Pound came under pressure as a leading policy maker criticised the Bank of England’s policy approach.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6309 as of 14:35 GMT
Monetary Policy Committee Member Martin Weale asserted that the forward guidance approach adopted by the new Governor of the BoE is likely to have only a very small impact on UK growth.
Weale asserted; ‘I find it inconceivable that, without forward guidance, I, or any of my colleagues, would have already voted to raise bank rate and that the only thing that has stopped us is forward guidance. To the extent that the policy simply represents the way the MPC had behaved before it was announced, then, while bank rate might well stay at 0.5 per cent into 2016 or beyond, it would do that in circumstances where, broadly speaking, it would have done it anyway. In that case the impact of the policy might be negligible.’
Weale’s was the only dissenting voice among the nine-member committee, but this note of discordance caused the Pound to slide against the majority of its main currency rivals.
Sterling slipped against the Euro even after data showed that UK construction output surged by 2.2 per cent in October, month-on-month.
1 US Dollar is currently worth 0.6126 pence
As the European session opened on Monday the Pound was trading slightly higher against the US Dollar having trimmed declines overnight.
However, the British asset extended losses against the Euro as reports showed that UK house prices fell while the Eurozone’s manufacturing sector expanded by more-than-expected.
Before the close of local trade the Pound pared its small advance against the ‘Greenback’ as the North American currency was supported by encouraging industrial/manufacturing production reports for the US.
The surprisingly upbeat reports add to the case for the Federal Reserve opting to taper stimulus when it meets this week.
Although the prospect of a reduction in easing has largely been priced into the market, if the Fed trims asset purchases by more than the 5 billion Dollars estimated the GBP/USD pairing could falter.
With several pieces of influential Eurozone data set for publication this week (including tomorrow’s ZEW economic sentiment surveys) GBP/EUR volatility is also likely.
In the hours ahead investors will be focusing on UK inflation figures, scheduled for release at 09:30 GMT.
Key UK data for the week ahead:
Tuesday: UK Producer Price Output
UK Consumer Price Index
UK Retail Price Index
Wednesday: Bank of England releases minutes from policy committee meeting
UK Jobless Claims Change
UK ILO Unemployment Rate
UK Employment Change
Thursday: UK Retail Sales
Friday: UK Final Third Quarter GDP
Current Pound Sterling (GBP) Exchange Rates:
< Down > Up
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6309 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1849 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.8248 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9770 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6126 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8441 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5477 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5057 <
(As of 14:35 GMT)