A day before the Bank of England’s presentation of the updated inflation forecasts, the major currency of the country, the Pound has weakened against USD. This has happened for the 4th straight day now and many are speculating that the investors will be cutting down their holdings of the Pound soon. Pound, also known as Sterling, dropped to a 2-week low figure against Euro as a recently released industry report showed that a gauge of the house prices in UK jumped up to the highest level since June, 2010. On 1st May, Pound jumped to a 3-month high figure against USD at $1.5606, but, since then, the currency has declined by 2.4%. On the other hand, the Government bonds experienced a fall as well after the Debt Management Office sold 5-year gilts worth 4.75 billion pounds.
According to the currency strategist of Commerzbank AG, Peter Kinsella, certain investors are taking off the long cable positions, before the scheduled release of the inflation report. He is currently betting that Pound will soon jump up against USD.
Pound has declined by 0.3% on today and it is currently priced at $1.5246. At one point of time, it declined to $1.5229, marking the lowest level since 24th April. On the other hand, Pound experienced a decline of 0.3% against Euro as it is currently at 85.05 pence per Euro. It tumbled to 85.17 pence per Euro at once, thereby marking the least value since 25th April.
On tomorrow, Mervyn King will be holding his last news conference as the Governor of Bank of England as the Central Bank is all set to publish the results of its quarterly survey.
According to the Currency Strategist of the Credit Suisse Group, Ric Deverell, Sterling is currently vulnerable to a rather dovish inflation report as it gained against Euro recently after the reduced expectations of any further asset purchases. In April, Pound strengthened by 1.9%, becoming the third best performing currency after Canadian Dollar and USD, if all the developed market currencies are considered.
According to the latest survey of the Royal Institution of Chartered Surveyors, the index of the UK home prices has jumped up to 1 on last month from a value of -2 in March. Incidentally, a positive number denotes that more number of respondents saw values increase, than decline.