he pound rose against the dollar after the Bank of England left its bond-buying program at 375 billion pounds ($583.5 billion) and kept interest rates on hold.
Gilts rose after policy makers maintained their key rate at 0.5 percent, as predicted by all 53 economists surveyed by Bloomberg News. The central bank increased its bond purchases by 50 billion pounds last month to boost a U.K. economy in its first double-dip recession since the 1970s amid a deepening euro-region debt crisis.
“It’s very much a case of the bank being prudent in waiting to see how its current policies pan out and leaving a little room if the euro-zone crisis worsens,” Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said before the announcement.
The pound rose 0.2 percent to $1.5563 at 12:23 p.m. London time. It fell 0.2 percent against the euro to 78.82 pence.
Sterling has depreciated 1.5 percent in the past three months, the fourth-worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes amid the deteriorating economy. The dollar gained 3 percent, while the euro slid 4.8 percent.
The median forecast of 40 economists surveyed by Bloomberg was for so-called quantitative easing to be maintained. One analyst predicted an increase to 400 billion pounds.
BOE Toolkit
The Bank of England has expanded its toolkit with a Funding for Lending Scheme to unclog bank credit and help pull the country out of recession. The worsening outlook prompted banks including Morgan Stanley (MS) and Barclays Plc (BARC) to revise forecasts this week and predict more U.K. stimulus later this year.The European Central Bank may announce a plan today to tackle the debt crisis that’s hurting global growth, even as it keeps its main rate at 0.75 percent, also an all-time low, according to another survey.
ECB President Mario Draghi said last week that he will do whatever is needed to preserve the 17-nation currency.
The yield on the benchmark 10-year gilt slid three basis points, or 0.03 percentage point, to 1.49 percent. It fell to a record 1.407 percent on July 23. The 4 percent bond due March 2022 rose 0.24, or 2.40 pounds per 1,000-pound face amount, to 122.345.
Shrinking Economy
The U.K. economy shrank the most since 2009 in the second quarter, the Office for National Statistics said on July 25. Manufacturing contracted the most in more than three years in July, Markit Economics reported yesterday.U.K. gilts returned 3.9 percent this year, after surging 17 percent in 2011 as investors sought a haven from the euro- region’s debt crisis, indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies showed. German bunds gained 3.6 percent in 2012, with U.S. Treasuries earning 2.6 percent.
The 10-year gilt added seven basis points and the pound fell 0.4 percent versus the dollar after the Bank of England expanded its QE program by 50 billion pounds on July 5.
Reymount Investment Products & Services:
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.