Pound Dominated By Bank Of England

Feb.23.2010

Mervyn King continues to dominate the Pound’s agenda, and not in a positive way. His big hints about more QE pound the pound as it makes another attempt to break the support line, says Yohay Elam at Forex Crunch. Catch Yohay, and TheLFB trade team on ForexTV Live. 

The governor of the Bank of England, Mervyn King, hurt the Pound once again. In his appearance in parliament, the agenda was inflation – the quarterly Inflation Report Hearings. But these aren’t the headlines that King produced.

Together with his colleagues from the central bank, he began by saying that economy is still fragile, already a weak start. Concerning the official agenda, inflation, he continued to shrug it.

QE

What about the Quantitative Easing program? This program, officially called the Asset Purchase Facility, means that the bank buys bonds to increase liquidity, and practically spills pounds, devaluing the currency.

The program was expanded up to 200 billion pounds, and the money recently ran out. In the recent decision, there was no additional allocation of money to the program. End of story?

No. Mervyn King and his colleague David Miles said in parliament that “there’s a strong case to expand the program if the economy is weaker”. Although there is an “if”, the fact that these policymakers didn’t rule it out means that it sure is possible, and that bad for the Pound. Full Article…

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