Posts Tagged ‘ BOE ’

Pound receives a boost as BoE delay forward guidance statement

The Pound has found some support against the majors following the Bank of England interest rate announcement this lunchtime. The MPC neglected to release a statement on forward guidance and have postponed it until the 7th August, which will coincide with the quarterly inflation report. The Central Bank also left interest rates and quantitative easing unchanged for the month.

There will be widespread speculation ahead of the release of the key inflation report next week and Sterling is unlikely to gain much ground against the majors between now and that release. Nonetheless, the lack of a statement today has a positive impact with the Pound bouncing back above 1.52 against the Dollar and 1.15 versus the Euro.

The one currency that has been sold even more aggressively than the Pound this week is the Australian Dollar and the exchange rate is heading towards a fresh three year high just under 1.70.

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Barclays calls for £5.8bn cash to fill shortfall

Barclays calls for £5.8bn cash to fill shortfall.

Earlier today Barclays revealed that it plans to issue £5.8 billion in new shares in an effort to build cash and refill a capital shortfall created by new regulatory demands – a move that will make the bank stronger, Barclays said.

In addition, Barclays will also issue £2 billion of bonds that are turned into shares or wiped out if the bank gets into trouble.

The share sale will be done as a rights issue, which means that existing investors will have the opportunity to buy new shares so their stakes will not be diluted.

Notably, within the same breath, Barclays also admitted that adjusted second quarter pre-tax profit fell 17% to £3.6 billion.

The plans enable the bank to maintain its planned level of lending growth, according to Barclays chief executive Antony Jenkins.

“I am certain the decisive and prompt action we are taking will leave Barclays stronger”, he stated.

The Barclays move comes after the banking regulator, the Prudential Regulation Authority, issued tough new capital requirements aimed at ensuring that banks are protected from the risk of investment losses, even in the event of a fresh financial crisis.

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Pound falls to 5 week low ahead of BOE decision

Pound falls to 5 week low ahead of BOE decision.

Sterling weakened to a five-week low against the US Dollar on Thursday, before Bank of England Governor Mark Carney’s first policy decision.

The Pound also fell against all but one of its 16 major counterparts.

Meanwhile, the UK central bank is expected release a statement, a move that typically represents a change in policy.

However, according to a survey of Economists, the nine-member Monetary Policy Committee will keep its quantitative easing target and the benchmark interest rate unchanged.

Therefore, Senior Currency Strategist Paul Robson believes that the statement will break tradition, “We’re not expecting Sterling to react poorly to the fact that we get a statement. The data point to the economy growing, so it’s quite hard for them to justify anything too dovish at this point”.

The Pound fell 0.2% to $1.5249 this morning, after it dropped to $1.5130 yesterday, the lowest since May 30.

At the time of writing, £1 buys $1.525. If you wish to have a more detailed currency outlook or to find out how economic and political news could affect your currency transfers, speak to a deVere FX Manager today.

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