BLBG:Pound Plunges to 15-Month Low Against Euro on BOE
The pound tumbled to a 15-month low against the euro after the Bank of England said some officials voted to expand asset purchases at their meeting this month, a policy that that typically debases currencies.
Sterling dropped to the lowest level since June against the dollar after minutes of the central bank’s Feb. 7 meeting showed policy makers also considered an interest-rate cut. Governor Mervyn King and Paul Fisher joined David Miles in voting to increase the target for bond purchases by 25 billion pounds ($38.3 billion) to 400 billion pounds, though they were outvoted by the remaining six members of the Monetary Policy Committee. U.K. government bonds fluctuated.
“2013 just goes from bad to worse for the pound as this morning’s MPC minutes came out with a surprisingly bearish vote,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “This continues the snowball of gloominess which has been gathering pace against sterling with the downside risk now getting more worrying for the friendless pound.”
The pound depreciated 0.8 percent to 87.53 pence per euro at 10:01 a.m. London time, and reached 87.65 pence, the weakest level since October 2011. Sterling fell 0.6 percent to $1.5330, after sliding to $1.5317, the lowest since June. 1.
The 10-year gilt yield was little changed at 2.18 percent after falling as much as nine basis points, or 0.09 percentage point, after the minutes were released. The U.K. is selling 2.25 billion pounds of the securities tomorrow.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
