Singapore/Tokyo: The British pound edged up on Thursday as investors counted on the Bank of England to cut interest rates to a record low, while a rebound in oil prices from four-month lows lifted Asian stocks.
The sterling rose 0.1 per cent to $1.3340, keeping some distance from its three-decade low of $1.2798 hit almost a month ago, although currency markets may be somewhat ambivalent over how to react to the BoE decision – buy sterling if the BoE cuts, sell if it doesn’t, or vice versa?
Meanwhile, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent, led by gains in resource shares, recouping some of its 1.5 per cent losses on Wednesday.
The expected BoE cut to a record low 0.25 per cent later on Thursday would be the first since 2009 as Britain’s economy teeters on the brink of recession.
“Given the market has a 25 basis-point cut priced at 100 per cent, one would expect a huge spike in GBP/USD if they fail to ease,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.