Wednesday, July 20, 2011

UBS: the odds of QE in the UK declined

British pound rose today versus the single currency and US dollar after the minutes from the Bank of England’s MPC meeting showed that the number of QE advocates has reduced.

The policymakers voted 7-2 to keep the benchmark interest rate unchanged this month as the majority of them said that the recent data shows that the near-term tightening isn’t necessary.

In contrast to the June meeting, there was no mention of other the MPC members calling for more bond purchases this month.

Right after the release of the minutes GBP/USD fell to the daily minimum of $1.6067, but soon recovered getting up to the $1.6130 area. Currency strategists at UBS claim that the outlook for the pair will become bullish if it manages to overcome resistance at $1.6194. Support for sterling is situated at $1.6006.

daily gbpusd 17-02

Chart. Daily GBP/USD

published by FBS Holdings © 2011