Miles Comments on UK Economy Help Pound Gain

From a 5-month low against USD, Pound, the major currency of United Kingdom has finally been able to jump up, thanks to the comments of David Miles, a policy maker of the Bank of England. Miles stated that the UK economy, within the next 18 months, is expected to improve between 2% and 2.5%. Incidentally, Miles was the only member in the Monetary Policy Committee who voted for an expansion of the stimulus and hence, these remarks are considered by investors as hawkish. According to Jane Foley, who works as the Senior Currency Strategist of Rabobank International, comments made by Miles helped Pound as many investors may have actually covered short positions based on the same.

Sterling also improved against Euro, for the 1st time in last 4 days. Incidentally, tomorrow a report is expected to come out on the mortgage approvals of the country for December and many analysts are predicting that the same will see increases. The Government bonds of UK have seen a rise as the Debt Management Office has already sold $6.3 million of debt, which is to mature in 2044.

Yesterday, Pound actually dropped to $1.5675 marking the lowest value since 17th August. Today, it increased by 0.3% and is currently at $1.5741. On the other hand, against Euro, it has gained 0.2% and each Euro costs 85.56 pence now. In 2013, Sterling has weakened by 3.4% on a whole and is the 2nd worst performer among the developed market currencies, right after Yen. This year, USD has gained 0.1% and the growth for Euro is 2.4% so far.

In last quarter, the Gross Domestic Product of United Kingdom has declined by 0.3%. The initial prediction, however, was of a decline of 0.1%. The statistics was released by the Office for National Statistics on 25th January.

In December, the mortgage approvals increased to 54,500 from 54,000 in that of November. On yesterday, incidentally, the next Bank of England Governor Mark Carney stated that the Central Banks all over the world still have enough room to ease the monetary policy even further.

The 10-year UK yields experienced a fall of 2 basis points and are at 2.08% currently. The 1.75% bond which is scheduled to mature in September, 2022 has increased by 0.17 and is at 97.11 now. The 30-year yields, however declined by 1 basis point.