Pound to Dollar Rate Remains Flat Following BoE Meeting
The pound was hovering above the 1.39 level as the new week dawned, having lost ground against the dollar on Thursday after the Bank of England decided to leave the cost of borrowing and bond purchases untouched. The central bank voted unanimously to keep interest rates at a historic low of 0.1%, and an 8-1 vote confirmed that the total target stock of asset purchases would remain at £895 billion – Andy Haldane, the outgoing chief economist, was the only dissenting vote.
“Although downside risks were judged to have fallen as the recovery had taken hold, these considerations still had force. Policy should both lean strongly against downside risks to the outlook and ensure that the recovery was not undermined by a premature tightening in monetary conditions,” the central bank stated in its meeting minutes.
Confidence among UK shoppers has remained flat in June. GfK’s Consumer Confidence Index stayed at -9, the same level recorded in May. According to Joe Staton, client strategy director at GfK: “A repetition of last month’s score doesn’t mean confidence is about to nose-dive. The upwards trajectory for the index since the dark days at the start of the pandemic is currently still on track.”
Highest rise in US inflation in almost 30 years
Softer-than-expected US inflation data on Friday did little to cool concerns about the Federal Reserve easing its monetary stimulus. The US Personal Consumption Expenditures (PCE) price index – excluding seasonally volatile products such as food and energy – increased 0.5% month-on-month in May, missing economists’ forecasts for a 0.6% rise. However, the rise in core PCE to 3.4% year-on-year in May represented the biggest jump since 1992.
The University of Michigan consumer sentiment index, released on Friday, showed one-year inflation expectations dropped to 4.2% in June from a decade-high 4.6% the previous month. The survey illustrated that “consumers also believed that the price surges will mostly be temporary.”
US consumer spending, which makes up more than two-thirds of domestic economic activity, was static last month as shortages hurt motor vehicle purchases. The unchanged reading followed an upwardly revised 0.9% jump in April, the Commerce Department said on Friday. Economists had forecast spending would rise 0.4% in May.
Looking ahead
Investor focus will shift to conditions in the US labour market this week. Among a raft of economic indicators in the coming days, Friday’s Nonfarm Payroll data is a key focus, with economists forecasting an increase of 675,000 jobs in June. The first notable data sets from the US economy hit the headlines tomorrow: the House Price Index and the Consumer Confidence reading for June.
The first notable data from the UK economy arrives on Wednesday when the Office for National Statistics releases the Gross Domestic Product figure for Q1.
The post Pound to Dollar Rate Remains Flat Following BoE Meeting appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2021/06/pound-to-dollar-rate-remains-flat-following-boe-meeting/
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