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British Pound Rallies despite Unanimous BoE Rate Decision, Euro Edges Lower ahead of Greek Vote and US Dollar Trending Statically ahead of Housing Data

Published: 22 Jul at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, USA, Greece,

Pound Sterling (GBP)\r\nThe British asset rallied versus most of its major peers on Wednesday despite the fact that minutes from the most recent Bank of England (BoE) interest rate decision showed all nine Monetary Policy Committee (MPC) members opted to hold the cash rate. Sterling appreciation can be linked to speculation that may MPC members will vote to hike the lending rate in the August interest rate decision meeting. The minutes showed that one of the primary stumbling blocks preventing some policymakers to vote for a hike was geopolitical uncertainty in Europe. Now that tensions in Greece have eased to a certain extent, that stumbling block is not longer an obstacle.\r\n\r\nThe BoE minutes stated; ‘For these members, the uncertainty caused by recent developments in Greece was a very material factor in their decisions: absent that uncertainty, the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced.’ \r\n\r\nEuro (EUR)\r\nHaving gained versus its major rivals in response to easing concerns regarding the Hellenic nation, the shared currency edged lower on Wednesday. This is mostly due to fears that Greek MPs, who will be voting on whether or not to accept a second package of reforms to unlock financial aid, will vote against additional reforms. Should this be the case, the likelihood that European finance ministers will be willing to re-enter negotiations is slim to none. \r\n\r\nMany analysts predict that the common currency will decline irrespectively of the situation in Greece. Should Greek MPs vote yes to the proposed measures, trader focus will shift from geopolitical developments to monetary policy. The European Central Bank (ECB), having only comparatively recently cut the benchmark interest rate, is dragging its heels when compared with monetary policy outlook from other major central banks. \r\n\r\nUS Dollar (USD)\r\nThe US asset is holding steady versus most of its currency peers during the early half of Wednesday’s European session. After speculation of a fourth-quarter Federal Reserve rate hike and falling gold prices supported a ‘Greenback’ (USD) surge, the US Dollar edged lower towards the end of the North American session as traders took advantage of attractive selling positions. \r\n\r\nUS economic housing data, due for publication later on Wednesday afternoon has the potential to provoke volatility for the US asset.
As of Wednesday, 22nd July 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.4288, GBP USD exchange rate was 1.5616,
Dominic Lee About Author: (372 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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