Excerpt from: Futures and Commodity News
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| October 25, 2006 | | Sterling set to do well versus euro on the spot forex market | Bloomberg reports that the Bank of England is ready to curb inflation with future rate increases as more officials speak to the necessity of slowing a heating economy. This means that the sterling is likely to continue its advance against the euro in spot currency trading, and that it remains a favourable spread bet and contracts for differences order. Shorting EUR/GBP (thus favouring the pound) could be a good idea. Bloomberg has more:
The pound may advance after Bank of
England chief economist Charles Bean said policy makers should
``err on the side of caution'' to curb inflation in Europe's
second-biggest economy.
The U.K. currency rose to its highest in a month versus the
euro after Bean yesterday told the London School of Economics,
that ``if inflation has settled above target, a deeper or more
prolonged slowdown is potentially required to bring it down.''
The pound gained last week after minutes showed two policy makers
voted to lift interest rates at the BOE's last policy meeting.
``Bean's lining himself up as one of the people who will be
voting for a hike next month,'' said Paul Robson, a currency
strategist at Royal Bank of Scotland Group Plc in London. ``Euro-
sterling will trade a little bit lower.'' | | |
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