Quantitave Easing Speculations Affect Pound Performance

The pound erased yesterday’s gains this morning after the Bank of England may insist in further quantitative easing measures as an attempt to revive the weakened British economy, which was one of the most affected by last year’s credit crunch.
The pound is losing today versus most of the 16 major currencies after Bank of England Governor Mervyn King suggested that further measures should be taken in order to rescue the British economy from the current recession, raising speculations that interest rates in the country will remain in bottom levels. Quantitative easing measures, such as printing out more bank notes are likely to be used by the Bank of England to stimulate the economy domestically, which would certainly reflect in a prolonged period of losses for the pound, currency which declined massively since last year’s second semester. Naturally opposed to the pound’s movements, U.K. gilts rose today.
The pound will remain pressured in the short-term, according to analysts. The United Kingdom is being one of the most affected countries by the current global recession, and measures taken so far proved to be ineffective to reestablish a sustainable economic growth in the country, which is influencing the nation currency negatively, being the pound one of the most uncertain bets among the top 6 traded currencies.
GBP/USD traded at 1.6422 as of 11:12 GMT from 1.6588 hours before BOE’s last declaration. EUR/GBP rose to 0.8600 from 0.8525.

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