Sterling at risk of fall due to Quantitative Easing

Wednesday 21st September 2011
Good morning. Sterling remains near 8 month lows vs the US Dollar, but was up slightly against the Euro following the downgrade of Italy's credit rating. More losses for the Pound are expected today if the Bank of England (BoE) minutes show Quantitative Easing (QE) is discussed. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1480
• GBP/USD 1.5691
• GBP/AUD 1.5299
• GBP/NZD 1.9095
• GBP/CHF 1.4016
• GBP/CAD 1.5613
• GBP/ZAR 12.204
• GBP/JPY 119.72
• GBP/DKK 8.5485
• GBP/NOK 8.8934
• EUR/USD 1.3665

Sterling at risk of a drop due to Quantitative Easing

At 09:30am this morning we will see the minutes to the recent Bank of England minutes. We already know that interest rates were left on hold. What we will be looking for is any sign QE was discussed at the meeting. If it was, then this will weaken the Pound as it will show that QE is the only method the BoE has to try and stimulate the economy. Quantitative Easing is explained here on the Bank of England site.

Sterling has been performing quite well against the Euro of late, due to the fact its the best of a bad bunch of currencies. We expect continued pressure on the Pound in the coming days and weeks, and we could well see exchange rates fall.

Gloomy data and surveys in recent weeks have stoked fears about the economic outlook, while MPC members Martin Weale and Charles Bean said in interviews last week that the risks had grown recently.

Currency Exchange 'too costly'

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