Rumours that the Bank of England was going to commit to more Quantitative easing were quashed today.
At the banks monthly monetary policy committee meeting it was decided that it would not increase its quantitative easing programme. After it was revealed that the UK has slipped into a double-dip recession, the first double-dip recession since the 1970’s. Many investors were speculating that the bank would decide to pump more cash into the economy.
It is good news for anyone looking to sell sterling as those rumours were part of the reason the currency was showing signs of slowing down in its strengthening against many other currencies including the Euro. There was some bad news for savers with the Bank also deciding against any rise in interest rates. The rate will stay at 0.5%.
Ian McCafferty, the Confederation of British Industry’s (CBI) chief economic adviser, said:
“The combination of sluggish activity and sticky inflation put the MPC in a difficult position, and this decision is likely to have been a close call. But it appears that the persistence of inflationary pressures tilted the balance in favour of keeping the stock of asset purchases unchanged.
With economic conditions subdued, and signs of euro area tensions building again, another round of QE cannot be ruled out. But we expect the recovery to be on a firmer footing in the second half of the year, as inflation eases and the global economy strengthens”.
Thanks to the ongoing political confusion in Greece and the ever deepening crisis in Spain, the pound has continued to strengthen as worried investors flock to what they see as a safe haven.
Elsewhere in the UK, the latest manufacturing figures were released by the office of national statistics (ONS). The data showed that the countries production output jumped in March bringing the ONS figure more in line with independent data analysts. Manufacturing output increased by 0.9 percent in March after a shock 1.1 percent plunge in February, versus forecasts for a rise of 0 .5 percent.
The ONS said the rise was driven by chemicals and chemical products, transport equipment, and computer, electronic and optical products, the ONS said.
The Pound to Euro exchange rate is currently trading at 1.247
The Pound to US Dollar exchange rate is currently trading at 1.616
The Euro to US Dollar exchange rate is currently trading at 1.295
The Euro to Pound exchange rate is currently trading at 0.801
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