The pound touched a four-month low against the dollar as investors speculated the Bank of England isn’t in a hurry to raise interest rates. The currency tumbled after a member of BOE’s Monetary Policy Committee David Miles said that the central bank will retain the record-low interest rates for “a bit longer”.
The pound remained slightly unchanged at $1.6687 at 1:27 p.m. in London after hitting $1.6658, its lowest level since April 8. The currency traded under its 200-day moving average of $1.6664, the first time to do so in 11 months. The sterling slid 0.1 percent to trade at 80.15 pence per euro after earlier falling to 80.27 pence, its lowest level since June 30.
“It is hard to avoid the conclusion that they simply want to keep rates as low as possible for as long as possible irrespective of the outturn in economic data,” Peter Kinsella, a London-based senior currency strategist at Commerzbank AG, told Bloomberg News. “I think the best way to articulate a mildly bearish sterling view is to go short” the pound versus the dollar.”
The yield on the 10-year gilt tumbled 0.01 percentage point or one basis point, to 2.43 percent after earlier declining to 2.39 percent, the weakest level since August 2013. The yield on the two-year bond fell 0.01 percentage point to 0.70 percent.
Meanwhile, the Brazil’s real advanced as traders reviewed the direction the country’s presidential elections will take after a presidential contender Eduardo Campos died yesterday in a plane crash in Sao Paulo due to bad weather.
The real gained 0.5 percent to trade at 2.271 per dollar as of 9:55 a.m. local time, having dropped 0.2 percent on Wednesday as news of Campos death filtered in. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com