By TraderVox.com
Tradervox.com (Dublin) – The sterling pound dropped to a one-month low against the euro after UK data showed the inflation in the country slowed to the lowest in almost three years. The data has spurred speculation that the Bank of England will initiate additional stimulus after it failed to do so in its last meeting. The country’s ten-year gilts rose to the strongest level in three weeks after senior coalition lawmakers indicated that they are open to Spain requesting for precautionary credit line from European Stability Mechanism as a way of curbing the demand for safest government assets.
The report that sparked the pound decline showed that the UK consumer prices rose 2.2 percent last month, from the 2.5 percent rise the previous month. The pound has fallen for the second day today before the release of the Bank of England Monetary Policy Committee meeting minutes. Talking about the pound decline yesterday, Banci Bilbao Vizcaya Argentaria’s Peter Frank said that the inflation is on track to reach the 2 percent target, adding that there will be no option but for the Bank of England to add stimulus. In their last meeting, the MPC held its bond purchase target t 375 billion pounds and held benchmark interest rate at 0.5 percent.
The pound declined by 0.3 percent against the euro to exchange at 81.25 pence per euro after declining by 0.3 percent yesterday. It had earlier declined to 81.38 pence per euro, which is the weakest it has been since June 15. The sterling pound has gained against the greenback, increasing by 0.1 percent to exchange at $1.6134 after reaching its highest level since October 8 of $1.6138. The market is now turning its focus on the November 7-8 MPC meeting which will decide whether to add stimulus after the current round of purchases is depleted by next month.
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