The fall of the British pound
The British pound decreased rapidly especially in relation to the United States dollar throughout morning Forex trading session after the necessity of another interest rates cut by the Bank of England became quite obvious. The negative information that caused such fall is the reports concerning the fall of the house prices and decline of the retail sales level. So the British currency reached the 1.95 point in relation to the USD.
According to the CMC Markets official – James Hughes the British currency declined in relation to the United States dollar in spite of the current inflation as the negative British economic data was issued.
The inflation revealed in the April producer price report was the reason caused Bank of England not to follow the fate of the Federal Reserve. Soon the April CPI data is to be issued and it seems that the numbers provided there will turn to be increased again. This, however, will show us the reason of why the UK central Bank refused to cut rates in May.
The official data says that the CPI inflation rate overcame the point of 2.6 percent. And the Bank of England governor Mervyn King says he will have to explain to the Chancellor of the Exchequer Alistair Darling the reasons of such growth over the 2 percent point.
According to Gavin Friend, the currency strategist at Commerzbank the main concern for the British currency in the short-term period is the Monetary Policy Committee expectations concerning the inflation. So the Inflation Report to be issued soon will provide answers for many questions.
Considering the US economic news we have to mention that the Federal Reserve Chairman Ben Bernanke took the floor today with a speech that may be quite interesting for the markets.
