Pound Drops After of BOE Minutes

By TraderVox.com

Tradervox.com (Dublin) – The sterling pound has dropped against the euro for the third day before BOE minutes were released at 9.30 GMT today. This came before the Chancellor of the Exchequer releases his budget report which is expected to increase the annual gilt sales to the second highest on record. However, the main event is the release of the Bank of England March meeting minutes during the European trading. Most analysts were expecting this to offer some support for the sterling pound pushing it higher against the euro and the yen.

However, this has not been the case since the release of the minutes. Sterling pound declined against major currencies but have increased narrowly against the yen. It dropped from considerably right after the release of the minutes against the dollar touching a low of $1.5848 at 9:37 GMT from $1.5920. GBPEUR pair dropped by 0.24 percent to 1.1967 after opening at 1.1995 but increased against the yen when GBPJPY pair rose by 0.28 percent to exchange at 133.15 from 132.77.

The minutes showed that two of the policy makers wanted to raise the target for quantitative easing program by 25 billion pounds, which would make a total of 350 billion pounds. However, the target was kept at 325 billion pounds after other seven members voted to keep the status quo. The members of the Monetary Policy Committee were, however, unanimous in keeping the interest rate at 0.5 percent.

Report from the Office of National Statistics has further showed that the budget deficit for UK increased in February due a decrease in taxes as spending surged. The net borrowing for this February was the highest on record. The minutes from Bank of England March 7-8 meeting show that Adam Posen and David Miles wanted the bond purchases target to be raised to stimulate the economy. This is seen as the major reason why the sterling pound has reduced against the euro and dollar.

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