Pound projection skyrocket to the topmost mark since 2011 on BOE rate bets
March 12, 2014 5:31 am
Analysts have boosted their year-end projections for the pound versus the dollar to the topmost mark in more than two years amid speculation the Bank of England will hike interest rates ahead of the Federal Reserve.
The U.K. currency is estimated to exchanged at $1.62 by December 31, according to a Bloomberg News survey. While that’s a 2.6 percent drop from the current mark, it’s the peak estimate for the end of 2014 since November 2011. Sterling was slightly altered against the dollar and euro today. U.K. government bonds ended a five-day slumped after Bank of England Governor Mark Carney ruled out selling the central bank’s entire gilt holdings.
“We continue to see economic growth remain strong in the U.K. this year even if it slows modestly later this year,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said yesterday. “Declining spare capacity in the U.K. economy may prompt the BOE to become the first major central bank to begin raising rates, in the first quarter of 2015, proving increasing support for the pound.”
Sterling inched down 0.1 percent to $1.6632 at 4:43 p.m. London time after surging to $1.6786 on March 7, the best moving mark since February 17. The U.K. currency was at 83.36 pence per euro after sagging down 1.5 percent in the past three days.
The pound has skyrocketed 13 percent in the past year, the best performer among 10 developed-nation currencies recorded by Bloomberg Correlation-Weighted Indexes. The euro logged a 6.7 percent increase, while the dollar slide 0.3 percent lower.
Developing Economy
Sterling has advanced amid assumption of a developing economy will trigger Carney to bolster borrowing costs sooner than policy makers predicted.
Reports from gdp to construction in the past year have increased to indications the economy is gaining momentum. Data today displayed both industrial production and manufacturing expanded in January. The Bank of England has kept its benchmark interest rate at a record-low 0.5 percent since March 2009.
Citigroup Inc.’s Economic Surprise Index for the U.K. soared last week to the peak point relative to its U.S. equivalent since September. The index, which shows if data surpassed or missed economists’ projections, was at 24.50 from this year’s low of minus 9.3 on January 16.
The equivalent U.S. gauge is at minus 33.60, leaving the U.K.’s measure at 58.1 greater. The spread widened to 60.5 on March 7, the biggest since September 4.
Spring Hikes
Bank of Tokyo-Mitsubishi projected the pound will exchanged at $1.70 by the end of the year, the joint-second most bullish in Bloomberg’s survey of 59 estimates.
Bank of England policy maker Martin Weale stated last month the first interest-rate hike will “come perhaps in the spring of next year.”
The 10-year gilt yield downgraded two basis points, or 0.02 percentage point, to 2.78 percent after surging 15 basis points during the previous five days.
The 2.25 percent bond due in September 2023 rallied 0.135, or 1.35 pounds per 1,000-pound face amount, to 95.61.
The Debt Management Office merchandised 3 billion pounds of 2.75 percent bonds due in September 2024 today at an average yield of 2.928 percent, up from 2.73 percent at the previous auction of 10-year gilts on February 20.
Policy makers announced last week they would reinvest 8.1 billion pounds of funds related to their 375-billion pound asset purchase program. The cash flow is connected with a gilt that matured on March 7, the Bank of England discussed.
Carney announced today in testimony to the Treasury Committee that the central bank would not merchandise its whole holding of gilts and any disposals should only start after interest rates have been boosted “several” times.
Gilts moved back 1.9 percent this year through yesterday, according to Bloomberg World Bond Indexes. U.S. Treasuries upgraded 1.4 percent, while German securities recorded a 2.2 percent increase.
The material has been provided by InstaForex Company – www.instaforex.com
Analysts have boosted their year-end projections for the pound versus the dollar to the topmost mark in more than two years amid speculation the Bank of England will hike interest rates ahead of the Federal Reserve.
The U.K. currency is estimated to exchanged at $1.62 by December 31, according to a Bloomberg News survey. While that’s a 2.6 percent drop from the current mark, it’s the peak estimate for the end of 2014 since November 2011. Sterling was slightly altered against the dollar and euro today. U.K. government bonds ended a five-day slumped after Bank of England Governor Mark Carney ruled out selling the central bank’s entire gilt holdings.
“We continue to see economic growth remain strong in the U.K. this year even if it slows modestly later this year,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said yesterday. “Declining spare capacity in the U.K. economy may prompt the BOE to become the first major central bank to begin raising rates, in the first quarter of 2015, proving increasing support for the pound.”
Sterling inched down 0.1 percent to $1.6632 at 4:43 p.m. London time after surging to $1.6786 on March 7, the best moving mark since February 17. The U.K. currency was at 83.36 pence per euro after sagging down 1.5 percent in the past three days.
The pound has skyrocketed 13 percent in the past year, the best performer among 10 developed-nation currencies recorded by Bloomberg Correlation-Weighted Indexes. The euro logged a 6.7 percent increase, while the dollar slide 0.3 percent lower.
Developing Economy
Sterling has advanced amid assumption of a developing economy will trigger Carney to bolster borrowing costs sooner than policy makers predicted.
Reports from gdp to construction in the past year have increased to indications the economy is gaining momentum. Data today displayed both industrial production and manufacturing expanded in January. The Bank of England has kept its benchmark interest rate at a record-low 0.5 percent since March 2009.
Citigroup Inc.’s Economic Surprise Index for the U.K. soared last week to the peak point relative to its U.S. equivalent since September. The index, which shows if data surpassed or missed economists’ projections, was at 24.50 from this year’s low of minus 9.3 on January 16.
The equivalent U.S. gauge is at minus 33.60, leaving the U.K.’s measure at 58.1 greater. The spread widened to 60.5 on March 7, the biggest since September 4.
Spring Hikes
Bank of Tokyo-Mitsubishi projected the pound will exchanged at $1.70 by the end of the year, the joint-second most bullish in Bloomberg’s survey of 59 estimates.
Bank of England policy maker Martin Weale stated last month the first interest-rate hike will “come perhaps in the spring of next year.”
The 10-year gilt yield downgraded two basis points, or 0.02 percentage point, to 2.78 percent after surging 15 basis points during the previous five days.
The 2.25 percent bond due in September 2023 rallied 0.135, or 1.35 pounds per 1,000-pound face amount, to 95.61.
The Debt Management Office merchandised 3 billion pounds of 2.75 percent bonds due in September 2024 today at an average yield of 2.928 percent, up from 2.73 percent at the previous auction of 10-year gilts on February 20.
Policy makers announced last week they would reinvest 8.1 billion pounds of funds related to their 375-billion pound asset purchase program. The cash flow is connected with a gilt that matured on March 7, the Bank of England discussed.
Carney announced today in testimony to the Treasury Committee that the central bank would not merchandise its whole holding of gilts and any disposals should only start after interest rates have been boosted “several” times.
Gilts moved back 1.9 percent this year through yesterday, according to Bloomberg World Bond Indexes. U.S. Treasuries upgraded 1.4 percent, while German securities recorded a 2.2 percent increase.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: