Bank of England today

10 May, 2012

We saw a relatively interesting day yesterday, as sterling rates rose to a 3 ½ year high against the Euro. This mostly came off the back of the ECB announcement that they were holding off 1bn Euros of the latest instalment of the Greek bailout. This is likely to be the first of many problems caused by anti-austerity political groups gaining strength in the recent Greek elections. Currently, rates on the mid-market stand at 1.24 on the sterling-euro rate. Some small gains for sterling may have been caused by the Queen’s Speech, wherein new economic measures were introduced, including proposals to increase shareholder power, and further regulation cuts on business. These measures, the government claim, will boost economic growth by reducing regulatory burdens.

All eyes today will be fixed on the Bank Of England announcements later on today. Due to the nation officially entering recession, many analysts believe that the BoE will vote for further quantitive easing, which has the potential to weaken sterling’s position considerably. However, any major falls seem to be unlikely, owing to the fact that, despite Britain’s economic problems, they frankly pale in comparison to the concerns in the Eurozone.

Slightly further afield, the Reserve Bank Of India have introduced measures to boost the value of the rupee, asking exporters to convert 50% of their foreign exchange holdings into rupees. These measures seem to have had some short term success, boosting the value of the Indian currency against both the US dollar and sterling, and making money transfers to India more expensive. The US Dollar itself is at a two week high against sterling, with analysts waiting for news from today’s BOE figures, as well as today’s US jobless figures. This could either cause the sterling to regain its strength against the dollar, or cause it to lose even more ground.