UK sterling to dollar holds steady as traders await Fed meeting details

UK sterling to the US dollar exchange rate is holding steady in currency markets today as traders await the details surrounding the US Fed’s decision on asset purchases which may or may not begin the process of normalising monetary policy in the US.

Latest UK Sterling Rates

As of 10:26 GMT today, one pound UK sterling bought 1.16670 euro (0.13 percent lower) and against the US dollar the rate was $1.56240 (0.13 percent lower). A weaker British pound makes commodities including oil prices more expensive for UK consumers, whilst some believe that UK exports will get a boost on a devalued UK currency.

Fed Meeting – Details

Investors are waiting to see if the US Fed, which wraps up a two day policy meeting later in today in America will make changes to its strategy of low interest rates and easy money that is helping to shore up the American economy. Any change is likely to ripple through the markets this afternoon.

Bank of England & QE

Mark Carney, the incoming governor of the Bank of England who starts his new role in July may want to devalue UK sterling to help reverse Britain’s sluggish growth, the world’s biggest bond fund Pimco has predicted.

Mike Amey, head of sterling portfolios at Pimco, said that Carney could attempt to depreciate UK sterling by as much as a massive 15 percent from today’s rates as he seeks to help British exporters tap into foreign demand. Such a move may or may not help Britain to recover from its worst recession in 50 years.

Meanwhile, Adam Posen, the external member of the Bank of England’s Monetary Policy Committee has upped his call for more quantitative easing (QE) to £100 billion and proposed a public bank for businesses struggling to find credit on the high street.

Posen has long been the MPC’s lone voice calling for a £50bn increase in the asset purchase programme which has seen the bank buy up £200 billion of gilts on the secondary market to help kick start the UK economy.

However, more QE in the UK may not be such a wise idea. The best thing that Mark Carney could do is probably to ease off the money printing. But investors are going to be looking at Carney and asking if he’s paid so much, why doesn’t he do something smart? Maybe he will be forced by media pressure to show he’s worth his salt, but what can he do? He could either raise UK interest rates and crash the UK housing market and maybe a few banks along the way, or pump up the printing machine and wreck savings further?

One thing is for sure, it seems that Mark Carney is not alone with a view to more QE coming to the UK soon.

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UK sterling to dollar holds steady as traders await Fed meeting details