Sterling Rescued by BoE Statement, Future Remains Unclear

The Great Britain pound was falling this week before the Bank of England announced its decision to expand bond purchasing program, brightening the grim outlook for Britain’s economy.
This week had a plenty of bad signs for the UK economy. The stalling construction sector, the slowing economic growth and the falling house prices — all these factors supported a pessimistic view on the economic conditions in the UK. There were positive sings, but they weren’t able to change the negative outlook.
Things changed after the BoE announced on October 6 the increase of its asset purchase facility by £75 billion to a total of £275 billion. The impact of the announcement was felt immediately as the sterling reversed its trend and continued to rise till the end of the week. The currency erased most of its losses from the previous sessions and managed to post a weekly gain versus the US dollar.

This week GBP/USD closed at 1.5560, near the opening of 1.5546, while during the week the price fell to 1.5270 — the lowest level since July 2010. GBP/USD fell from 119.83 to 116.94 over the week, but rebounded to 119.37. EUR/GBP rose from 0.8579 to 0.895, following the jump to the weekly high of 0.8733.

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