The sterling pound declined against the U.S. dollar today after the Bank of England released its Minutes for the last meeting, where all the Monetary Policy Committee members voted to keep the key interest rates unchanged at 0.5%, while eight committee members voted to keep the assets purchasing quantity steady at 200 billion Pounds, while one member (Adam Posen) voted against the proposition.
However, the Bank was strongly dovish this time, as the committee discussed a wide range of monetary easing alternatives including revising their pledge not to cut rates below the current rate, providing guidance to the rate path, and even changing the maturity of the APF assets, yet concluded that still at the current juncture, none of these options appeared to be preferable to a policy of further asset purchases should further policy loosening be required.
The royal currency faced downside pressures after the Bank of England decided to delay moves, which will worsen the outlook further, while further monetary easing should force the same downside pressures, especially when the economy is expected to contract in the second half of this year.
Regarding the GBP/USD, the pair declined sharply on the news today and hit a low of 1.5611 after recording the highest at 1.5754, noting that the pair opened the session today at 1.5734 and is currently hovering around 1.5665.
On the other hand, the U.S. dollar index (USDIX), which tracks the dollar's movement against other major currencies, gained today ahead of the FOMC rate decision, where the index opened the session at 76.98, and recorded a high of 77.30 and a low of 76.90, and trades now around 77.20, to recover the losses recorded in the past session.
Furthermore, the common currency is fluctuating against majors, amid mixed sentiment and affected by the dollar's movement against the pound and the Swiss franc, where on one hand renewed fears on a Greek default along with the strengthening dollar forced the currency lower, but on the other hand Venizelos, the Greek finance minister was able to make good progress in attempts to avoid default and get the next installment of 2010's bailout package, as the EC said.
The EUR/USD pair is currently trading around 1.3660, after rebounded from a low of 1.3640. The pair also recorded a high of 1.3722 after opening the session at 1.3700.
The U.S. dollar rebounded sharply to the upside against the Swiss franc, where after the USD/CHF pair reached a low of 0.8696, it rebounded to reach a high of 0.8984 and then eased a bit to currently trade around 0.8945, noting that the pair opened the session today at 0.8870.