Pound enjoys strong gains (video)

Currencies Direct April 23rd 2015 - 2 minute read

The British pound enjoyed a very positive day yesterday against all of the major currencies. The gains were made after the release of Bank of England minutes, which showed a unanimous decision to keep interest rates unchanged at their current historic low of 0.5% in April.

The minutes showed the Bank’s policymakers expect the Consumer Price Index (CPI) to fall into negative territory in the coming months and to remain low this year. There was also concern about wage growth at 1.8%. Wage growth is well above inflation, but nonetheless the BoE policymakers fear salaries are not rising quickly enough to meet their 2% inflation target in the medium term.

Despite all these worries, the MPC thinks that there is reason to cheer as it predicts that if growth continues at this pace, it will be only a matter of time before it will filter through wages and prices: helping inflation to get closer to the Bank’s target.

So far the market seems to be underestimating the risk of the UK elections. With only a few weeks to go, opinion polls show that the election is too close to call and Labour and Conservatives are neck and neck. Today UK retail sales and public borrowing statistics are also scheduled for release and will give another insight into the British economy. If the data is good it could help the pound rally further.

In Europe the market will focus again on the Greek debt crisis ahead of tomorrow’s meeting of Eurozone finance ministers in Riga. The market will also be busy digesting a lot of data due from the Eurozone today. The flash PMI surveys are all scheduled for release and will show how the Eurozone’s manufacturing and service sector firms are performing this month. French composite PMI, German composite PMI, and Eurozone composite PMI are all due out this morning.

US Initial Jobless claims and market manufacturing PMI are also scheduled for release.

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