The British pound grew by 1.6% this week due to fears of investors regarding the American financial situation.
Optimism plays a role that European leaders will be able to stop the spread of the crisis. There are hopes for more specific decisions based on the results of a meeting of the heads of central banks and finance ministers at the weekend. All this supported the mood of the market well. However, a sharp take -off of stock markets may be short -lived if Europeans are not able to soften the current fears about the debt crisis. After all, banks are already expressing disapproval regarding the hints of recapitalization. There are signals that soon the mood of the investors’ moods towards the dollar can occur, as the most popular races of the races.
Dossier in the economic situation in the UK, expected next week, presents a significant risk to pound due to fears regarding inflation.
The interest rate of the Central Bank at the level of 0.50% was determined last week with reference to the fact that “the rates of global growth have weakened”, with the “debt of some states and banks of the eurozone”. Traiders will view the voice counting report to evaluate how united by the members of the Committee on Monetary Policy. If the vote was unanimous, then it can be assumed that more and more officials believe that the recovery rate is slowing down, and we can expect a continuation of the bond purchase program. The central bank expanded the purchases as part of the program to £ 200 billion. Last week, on fears that inflation less than 2% continues to take root. That is, it is necessary to introduce further measures of monetary incentive of the economy.
In the program statement, the Bank of England noted that although inflation exceeded the target indicator this year, the tendency to reduce and establish at a low level is drawn, which will also negatively affect the economy. Although the further introduction of incentives in the economy will most likely exert pressure on the pound, the Central Bank will probably go to this to ensure growth.