By TraderVox.com
Tradervox.com (Dublin) – The sterling pound advanced against most of its major counterparts after the Swiss National Bank indicated that it has boosted the amount of pounds in its foreign-exchange reserves. The pound advanced against the greenback for the second day as speculation the Bank of England will refrain from making additional stimulus rose in the market. The market is waiting for the BOE decision which will be announced on November 8 after Monetary Policy Committee meeting. The committee will decide on whether to make additional stimulus from the current 375billion pounds. Speculation of additional easing declined in the market after the release of GDP data which indicated that the country’s economy grew by one percent in the third quarter, signaling a recovery from double-dip recession.
According to Raghav Subbarao, a Forex strategist in London at Barclays Plc, the expectation of a less loose monetary policy is offering support for the sterling pound. In addition, Raghav noted that last week’s data on GDP growth signals a stronger underlying trend. The SNB move to boost sterling reserve was a surprise move according to Raghav. He went ahead to predict that the sterling pound will strengthen to $1.65 by the end of the year. With the current monetary policy expiring this month, the BOE Monetary Policy Committee will have to decide on the way forward after it unanimously decided to keep the bond-buying target unchanged in their October 3-4 meeting.
In a statement to the press, the Swiss National Bank indicated that it has raised its pound reserves to 7 percent in the third quarter from the previous quarter’s 3 percent. The statement also indicated that it reduced its euro holding from 60 percent to 48 percent in the same period. The pound reacted by strengthening by 0.3 percent against the dollar to trade at $1.6113 at the close of trading in London yesterday. The currency had appreciated by 0.3 percent yesterday.
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