British Pound Up on MPC “news”

Just what is going on?  Usually, when the MPC is due to make an announcement, everybody is pretty sure what they will say, and then they say it.  In simple terms, at least.  But yesterday, they managed to leave the City confused, surprised and perhaps a little disappointed…

The committee had been expected to announce that they intend to extend QE and possibly even request permission from the Government.  However, in their statement they said that they intend to spend the rest of the current programme and then….well, they would see and decide at the next meeting in August.

So what on earth does that mean, asked City insiders and traders on the markets.  Did they intend to spend more come August or is that it?

The opinion is divided.  One thing is clear – the British pound was up by around 1 per cent against the US dollar and the yield on the benchmark 10-year gilt up by over 3 per cent.

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