Forex Flash: BoE MPC much closer to stimulus than suspected - BTMU

Lee Hardman FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the release of the more dovish than expected BoE minutes yesterday resulted in the pound’s recent sell off accelerating further providing another offset to the negative impact of the Fed’s QE3 programme upon the US dollar, with GBP/USD haven fallen sharply to close to 1.50 from 1.60 over the past month.

He writes, “The BoE minutes revealed that the MPC is much closer to expanding gilt purchases then expected given the significant upward revision to inflation, with Governor King joined by MPC members Miles and Fisher in voting for a further GBP25.0 billion expansion. Elsewhere the PMI surveys for February will be closely assessed to judge the strength of the ongoing economic rebound developing in the euro-zone with Germany clearly outperforming.”

Feb 21, 2013

Forex Flash: Structural reform remains in focus in Eurozone – Goldman Sachs

The economic challenges faced by many economies in the aftermath of the financial criis, especially in the Euro area, have brought the concept of ‘structural reforms’ squarely into focus. A combination of factors contribute to the implementation of reforms (such as the political environment and institutional quality), as does the need for reform itself (such as high indebtedness, crisis recovery, low growth and relatively moderate levels of efficiency). According to the Economics Research Team at Goldman Sachs, “Benchmarking countries of the Euro area periphery against these criteria suggests that there is a reasonable likelihood of them successfully undertaking such reform.”

Forex Flash: Fed dreams, markets stir - Societe Generale

Kit Juckes of Societe Generale comments that when the Fed dreams about one day exiting QE, the rest of the market has to wake up and think about what it will mean.