(Recasts with reaction to BOE minutes)
* Sterling up after BOE minutes shows Posen change of heart
* Euro/sterling falls to 19-month low, trade-weighted GBP
* "Golden cross" poised to be formed in cable charts
By Anirban Nag
LONDON, April 18 Signs more stimulus from the
Bank of England is now off the cards drove sterling to a
19-month high against the euro and a two-week high against the
dollar on Wednesday.
Minutes from the bank's last policy meeting showed it voted
8-1 against further stimulus, with one policymaker who had
consistently voted for more monetary stimulus moving out of the
dovish camp and another now seeing the decision as "finely
That wrong-footed many investors who had geared up for a
dovish set of minutes and lifted the pound across the board,
pushing it up around 0.7 percent on a trade-weighted basis.
More quantitative easing is considered to be negative for
the currency as it involves flooding the market with sterling.
"Having expected the voting pattern to match last month's
outcome, the markets were surprised by arch-dove Adam Posen's
change of heart, voting for no change to the quantitative easing
programme," said Alex Lawson, senior broker at Moneycorp.
"The one member who voted to expand the Bank's asset
purchases, David Miles, said that his decision was finely
balanced - reducing the chances for more stimulus in the coming
The euro fell 0.7 percent to 81.85 pence, its lowest level
since end-August 2010, breaking past reported option barriers at
82 pence. Near term support for the euro is around 81.43 pence,
a level seen on June 23, 2010. A break below that could see it
ease towards the 80 pence level.
"We stick with our view that euro/sterling breaks below 80
pence," said Chris Turner, head of currency strategy at ING.
"We have been very positive on sterling all year, but
progress to the upside has been frustratingly slow. This
probably owes to the UK's status as an old economy undergoing
necessary re-balancing towards the external sector - plus an
external sector skewed to the eurozone."
Given the UK's large exposure to the crisis-hit euro zone,
both through trade and financial links, sterling has often found
it tough to rally against the safe-haven dollar.
But on Wednesday, sterling rose to a two-week high of
$1.5994, with stops above $1.60 holding for now. Traders said
Asian central banks were selling the British pound at higher
Still, the medium term trend for sterling looked bullish on
the charts with some pointing to a "golden cross", with the
55-day moving poised to cross the 200-day moving average.
A golden cross would be formed if the former rises through
the latter and last time it happened in September 2010, sterling
rose from around $1.5400 to above $1.6500.
(reporting by Anirban Nag; editing by Patrick Graham)