Sterling exchange rate weak against dollar

Sterling exchange rates are close to a two-month low in trading with the dollar after the Bank of England's minutes were published in a report today (23rd December).

The minutes are non-committal on activity growth, leading to suggestions from economists that the option remains to extend quantitative easing in early 2010.

"There were exceptional uncertainties over the outlook for inflation and activity growth, which would only be resolved over time," says the report.

Geoffrey Yu, a UBS currency strategist, told Reuters: "The minutes were not dovish, it was more that they were not positive - we are not seeing the more upbeat tone we have seen in other central banks' comments."

After reaching peaks of around $1.66 earlier this month, the pound fell to $1.595 at midday on Wednesday.

The release of the minutes saw the euro rise slightly against sterling, trading at around 0.894 at midday.

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Posted by Thomas Smith