Sterling Advances on No Additional Stimulus Expectations

Sterling has advanced from a 2-week low value against USD as speculations are rife that the Bank of England will be refraining from extending the stimulus measures on the upcoming meeting. Incidentally, such extension of stimulus measurement may play a major role in devaluing the currency. According to the Chief Economist of FxPro Group Ltd., Simon Smith, the Bank of England’s meeting is definitely something to focus on; however, England is trapped by the stubbornly high inflation as well. He added that investors are expecting that King can get a consensus for more Quantitative Easing being tampered and as it seems, there are two different camps at this point of time.

As far as economists’ prediction is concerned, the asset purchase target will be kept at 375 million Pounds. When it comes to the last 2 meetings of the Bank of England policy makers, 3 members out of the 9-member Monetary Policy Committee voted for boosting the so called quantitative easing. This includes the current Governor of Bank of England, Mervyn King. 

Sterling has jumped up by 0.2% on today and is currently priced at $1.5141. A few days back, it actually went down to $1.5076, marking the lowest level since 20th March. Sterling was however more or less unchanged against Euro, as it is currently priced at 84.84 pence per Euro. British gilts, on the other hand, advanced ahead. 1.75 percent bond price increased by 0.18, whereas, the benchmark 10-year yield tumbled by 2 basis points. The same is now at 1.76%.

According to the data released by the British Retail Consortium, UK retail prices increased by 1.4% from its value of March, 2012. When it comes to February, the same increased by 1.1%. Sterling has declined by 5% since the beginning of 2013 and as it seems, impact of the same has started to get reflected in the retail sales figures.

A separate index measuring the construction activity jumped up to 47.2 in March, from its value of 46.8 in February. This is still below the 50 mark which shows that the industry has experienced contraction. The data was released by the Chartered Institute of Purchasing and Supply.

So far in 2013, UK gilts have returned 0.6%, as stated by the European Federation of Financial Analysts Societies. The German bunds advanced by 0.3%, however, the treasuries went down by 0.1%.