Pound Strengthens After BoE Minutes

05:07, 20th August 2014

(RTTNews) - The pound spiked against the other major currencies in European deals on Wednesday, as the minutes from the Bank of England's latest monetary policy meeting showed that some members of the monetary policy committee voted for an immediate rise in bank rate, due to improved economic growth in the U.K.

Ian McCafferty and Martin Weale voted against the proposition to maintain rates and recommended to increase bank rate by 25 basis points to 0.75 percent. They argued that the monetary policy would remain extremely supportive even after increasing rates, and an early rise would facilitate the Committee's aspiration that the rises in Bank Rate should be only gradual. Regarding the asset purchase target, the committee voted unanimously to keep it unchanged at GBP 375 billion.

The key rate was kept unchanged at a historic low of 0.50 percent in 7-2 vote at the August meeting.

Having fallen to 4-1/2-month low of 1.6600 against the greenback at 1:45 am ET, the pound reversed direction with pair trading at 1.6678.

The pound strengthened to 1-week highs of 1.5185 against the Swiss franc, 0.7969 against the euro and 172.23 against the yen, up from early lows of 1.5105, 0.8016 and 170.95,respectively.

The next possible upside target for the pound is seen around 1.675 against the greenback, 1.525 against the franc, 0.79 against the euro and 173.00 against the yen.