Pound experienced an increase against USD on today as the soon to be Bank of England Governor, Mark Carney stated that the current monetary policy of UK may be good enough to help the economy sustain. Hence, the speculations on stimulus expansion kind of dampened and the currency was therefore helped.
In July, 2013, Carney is all set to take the responsibilities of the post of Bank of England Governor from Mervyn King. Because of Carney’s statements, the British gilts experienced a fall. Incidentally, the Members of British Parliament questioned Carney before keeping the benchmark interest rate and asset purchase targets at same value. Incidentally, the benchmark interest rate is still at a record low figure of 0.5% and the asset purchase target is currently set at 375 million Pounds. Apart from that, Bank of England officials also announced that they will be reinvesting the proceeds from the first gilts in an attempt to mature in its portfolio of the debt bought under the quantitative easing plan of the same. Incidentally, thanks to the decision of keeping the key interest rate unchanged, Pound surged against Euro as well.
According to the Head Strategist of Standard Chartered Plc., Ned Rumpeltin, the British market was kind of getting into testimony with an expectation of a more dovish outlook. He added that Carney’s comments were more balanced than many would have expected; there were speculations of a more assertive stance being taken by Carney actually.
Only a couple of days ago, Pound was at $1.5631, the lowest since 10th August. On today, it increased by 0.2% and is currently at $1.5690. Incidentally, it surged ahead against Euro by 1.1% as well and is at 85.30 pence per Euro.
While making his statement, Carney acknowledged that he is not an expert when it comes to the current economic scenario of UK. He added that with his understanding, the current monetary policy is kind of consistent. According to Arne Rasmussen, Danske Bank’s Head of Currency Research Department, the market may conclude that Carney will be willing to step the monetary policy up in future, if, at all required. Arne also predicted that the major British currency will suffer hugely over the next 2 months. Incidentally, in 2013, Pound has experienced a total decline of 3.3% and is the 2nd worst performer just after Yen among the developed market currencies.