This week is a busy week for the pound with the Bank of England interest rate decsions scheduled for Thursday. If you had asked what the outcome would have been a couple of weeks back then I was confident that the Bank of England would inject further funds into the system through the process of Quantitative Easing – however following the much better than expected UK GDP figures released two weeks ago, I now feel it is unlikley the Bank will doing anything until after Christmas. Of course there is still a chance that Mervyn King will spring a surpirse, however I would expect him to hold off this month and I feel this may give Sterling a slight boost as a result.
Affect of the US Elections?
Also this week we have the culmination of the US elections. Polls suggest Obama is likely to get back in power but polls also indicate it is a close call. Personally I feel Obama getting back in power may give the market a slight boost in confidence and this could lead to a move in favour of risker currencies such as the AUD, this may counteract any Sterling strength from Thursday’s Bank of England decision. For this reason I think this week rates are unlikley to move a great deal and will stay range bound between 1.54-1.56.
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