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Pound Dollar Money Transfers at Lowest Level Since August 2012
Published: 14 Feb at 11 AM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Euro Crisis, UK, Economy, Inflation,
The pound fell to its lowest level since August 2012 against the dollar after the publication of the Bank of England’s quarterly inflation report by Governor Sir Mervyn King.
King added that inflation in the UK is likely to stay above its 2% target until early 2016. He also conceded that output had been broadly flat for the last two years, but on a brighter note, he noted a "more encouraging" underlying picture.
"The UK economy is set for recovery, that is not to say that the road ahead will be smooth. It hasn’t been a normal recession and it won’t be normal recovery," King said.
Gross domestic product (GDP) growth is expected to stay below its pre-financial crisis level until 2015.
King and his colleagues on the Monetary Policy Committee (MPC) continue to judge that the UK economy is set for a sustained, albeit slow, recovery in both demand and effective supply, aided by a further easing in credit conditions. King also emphasised that the risks to economic activity remain weighted to the downside, not least because of the challenges facing the euro area.
Analysts at Nomura commented that "In its February Inflation Report, the Bank of England was surprisingly aggressive in revising its inflation forecasts up. They are now not too dissimilar to our own, which is worrying in as much as the systematic bias of the MPC in underestimating inflation might mean our hawkish assessment is not flying high enough. The Bank’s growth forecasts remain much stronger than ours though, so it may just be that its systematic forecasting bias is being more exclusively focused on that side. But if the economy fails to recover – and we doubt momentum will last – the door remains open to further stimulus."
Meanwhile German Chancellor Angela Merkel has taken aim at multinational corporations that use tax rules in Europe and the US to avoid payments and said the G8 plans to fight tax havens.
Merkel said "It's not right that giant global companies have huge sales here [in Germany], in all of Europe, in the United States and elsewhere and then only pay taxes somewhere in a tiny tax haven. That's why we're going to fight to finally put an end to tax havens at the G8 meeting this year in the UK. The whole world will have to fight for it otherwise we won't accomplish that."
The better start to the year by the euro zone continues with news that the Italian treasury sold €5.2 billion in sovereign debt today through three separate auctions despite the uncertainty over the elections to be held later this month.
King added that inflation in the UK is likely to stay above its 2% target until early 2016. He also conceded that output had been broadly flat for the last two years, but on a brighter note, he noted a "more encouraging" underlying picture.
"The UK economy is set for recovery, that is not to say that the road ahead will be smooth. It hasn’t been a normal recession and it won’t be normal recovery," King said.
Gross domestic product (GDP) growth is expected to stay below its pre-financial crisis level until 2015.
King and his colleagues on the Monetary Policy Committee (MPC) continue to judge that the UK economy is set for a sustained, albeit slow, recovery in both demand and effective supply, aided by a further easing in credit conditions. King also emphasised that the risks to economic activity remain weighted to the downside, not least because of the challenges facing the euro area.
Analysts at Nomura commented that "In its February Inflation Report, the Bank of England was surprisingly aggressive in revising its inflation forecasts up. They are now not too dissimilar to our own, which is worrying in as much as the systematic bias of the MPC in underestimating inflation might mean our hawkish assessment is not flying high enough. The Bank’s growth forecasts remain much stronger than ours though, so it may just be that its systematic forecasting bias is being more exclusively focused on that side. But if the economy fails to recover – and we doubt momentum will last – the door remains open to further stimulus."
Meanwhile German Chancellor Angela Merkel has taken aim at multinational corporations that use tax rules in Europe and the US to avoid payments and said the G8 plans to fight tax havens.
Merkel said "It's not right that giant global companies have huge sales here [in Germany], in all of Europe, in the United States and elsewhere and then only pay taxes somewhere in a tiny tax haven. That's why we're going to fight to finally put an end to tax havens at the G8 meeting this year in the UK. The whole world will have to fight for it otherwise we won't accomplish that."
The better start to the year by the euro zone continues with news that the Italian treasury sold €5.2 billion in sovereign debt today through three separate auctions despite the uncertainty over the elections to be held later this month.
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Source: moneytransfer.co.uk