The pound dropped against most of its major rivals during the overnight session before the Bank of England releases minutes of this month’s policy meeting. The Bank of England’s Monetary Policy Committee left its base interest rate at 0.5% and held its asset purchase program unchanged at 275 billion pounds, after expanding it by 75 billion pounds in October. The minutes will reveal the stance within the BoE' officials, but the expectation is that the MPC voted unanimously to keep the interest rate and QE unchanged. The report is expected to give closer insides on why the committee held off from extending the asset purchase program, given the substantial undershot of the inflation target projected in November Inflation report. Separately, the BBA (British Bankers Association) lending data for October is also scheduled for today, with the expectations for the figures to have deteriorated from previous reading. The BoE official David Miles has argued that the UK housing market is likely to have been permanently transformed by the financial crisis, as the economy becomes less reliant on the housing market to drive consumption.
The euro consolidated during early morning session before the economic data scheduled for today may prove that Eurozone debt crisis is hampering economic growth. The PMI manufacturing gauge for Germany and France headline the calendar, with the expectations for the figures to prove that Europe’s two largest economies contracted in November. Expect for the single region currency to remain under pressure as Europe’s debt crisis is contaminating the economic prospects.
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