Pound Drops As BoE's Vlieghe Warns On Strong Currency
November 30 2015 - 1:03AM
RTTF2
The pound declined against its major opponents in European deals
on Monday, after the Bank of England's monetary policy committee
member Gertjan Vlieghe warned that the effect of the strong
domestic currency on UK monetary policy was huge, and indicated the
U.K. economic growth should stabilise or pick up before raising
rates.
Speaking to the Sunday Times, Vlieghe told that he was relaxed
about waiting a little longer before commencing the interest rate
hike, as the wage growth had seen some disappointment and economic
growth has slowed.
"We've had a huge tightening from the exchange rate," Vlieghe
said, adding that he would opt for a rate cut to another round of
quantitative easing, if the Bank need to act against the next
downturn.
The BoE financial monetary policy committee meets tomorrow, with
analysts expecting it to introduce new measures to curb buy-to-let
lending and consumer credit to cool credit growth.
Data from the Bank of England U.K. mortgage approvals increased
marginally in October.
The number of mortgages approved for house purchases rose to
69,630 in October from 69,012 a month ago.
It was also above the average of 68,099 over the previous six
months but slightly below the expected level of 69,900.
The pound showed mixed performance against most major rivals in
Asian trading. While it was steady against the yen, greenback and
the euro, it rose slightly against the franc.
The pound edged down to 1.5456 against the franc, off its prior
high of 1.5508. The next possible support for the pound-franc pair
may be located around the 1.53 zone.
The pound depreciated to 1.5001 against the dollar, its weakest
since April 20. Continuation of the pound's downtrend is likely to
take it to a support around the 1.49 region.
The pound reached as low as 0.7051 against the euro, down from
an early high of 0.7033. If the pound falls further, 0.715 is seen
as its next support level.
Figures from Destatis showed that Germany's retail sales
declined more than expected in October.
Retail sales dropped by real 0.4 percent in October from
September, when it remained flat. Sales were expected to decrease
0.2 percent.
On the flip side, the pound advanced to 184.87 against the
Japanese yen, compared to 184.55 hit late New York Friday. The
pound is seen finding resistance around the 186.00 mark.
The Bank of Japan Governor Haruhiko Kuroda said that further
slowdown in emerging economies poses risks to Japanese exports and
production which would in turn undermine corporate profits.
"The risk that a contraction in exports and production will
undermine corporate profits and hence investment does not seem to
be that great," he told business leaders in Nagoya.
Looking ahead, preliminary German CPI data for November, Canada
current account data for the third quarter, U.S. pending home sales
data for October and U.S. Chicago PMI for November are set to be
published in the New York session.
At 1:25 pm ET, European Central Bank member and Bank of Spain
Governor Luis Maria Linde will deliver the speech "Situation and
Outlook for the Spanish Economy" at Palma De Mallorca, in
Spain.
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