The pound fell yesterday against the majority of the 16 most actively traded currencies despite the announcement from the Bank of England (BoE) yesterday that it is maintaining the benchmark interest rate at 0.5% and its asset purchase programme, currently at £375 billion unchanged for at least another month. The decision was widely expected as UK rates have now been kept at the historic low of 0.5% since March 2009.
Dr. Howard Archer, Chief European+UK economist at IHS Global Insight commented that "We believe the Bank of England will remain in no hurry to raise interest rates despite its lower unemployment forecasts and improved growth expectations, barring any nasty inflation shock over the coming months."
The European Central Bank (ECB) followed suit by keeping its key policy rate unchanged at 0.25%. Again, the decision was widely expected.
In his follow-up statement, European Central Bank (ECB) President Mario Draghi said he expects the euro zone economy to remain weak throughout 2014commenting that the ECB’s would keep its policy unchanged and stands “ready to act” to resolve extreme scenarios in the euro zone.
In the US, data from the Bureau of Economic Analysis (BEA showed a much stronger economic performance from the |US than had previously been reported with the US economy expanding at an annualised pace of 3.6% in the third quarter, well above the preliminary estimate of 2.8%.
Today sees the publication of the latest US non-farm payroll data, the key employment data out of the world’s largest economy amidst mounting speculation that a second favourable figure in two months may just prompt the US Federal Reserve to start to ‘taper’ its $85 billion a month quantitative easing program.