BoE Expands Bond Purchase Program, Pound Tumbles
The Great Britain pound slumped today as the Bank of England held the main interest rates unchanged and expanded its bond purchase program today, signaling about weakness of the UK economy and debasing the nation’s currency.
The Bank of England’s Monetary Policy Committee decided today to keep the official Bank Rate at 0.5 percent. The central bank also increased the size of its asset purchase program by £75 billion to a total of £275 billion.
The bank spoke about the outside tendencies that are negative for Britain’s economic health:
The pace of global expansion has slackened, especially in the United Kingdom’s main export markets. Vulnerabilities associated with the indebtedness of some
euro-areasovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery.
The domestic fundamentals weren’t positive, either. The personal spending remained subdued despite the stimulating measures. The negative outlook for the output growth and the inflation doesn’t promise improvement anytime soon.
GBP/USD dropped from 1.5459 to the intraday low of 1.5270 before trading near 1.5379 as of 14:50 GMT today. GBP/JPY traded at about 117.94, following the drop from 118.68 to 116.94. Meanwhile, EUR/GBP climbed from 0.8631 to 0.8713.
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Earlier News About the Great Britain Pound:
- Is the Bank of England Ready for QE2? (2011-10-05)
- Economic Growth Stalls in Britain, Pound Feels Pressure (2011-10-05)
- Pound Weakens as UK Construction Stagnates (2011-10-04)
- Pound Falls, Slows Decline as Manufacturing Expands (2011-10-03)
- UK Pound Mixed in Forex Trading (2011-09-28)