Excerpt from: Forex News
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| August 06, 2009 | | Sterling drops in forex trading on announcement | Today, while announcing that the interest rate will remain steady at 0.5%, the Bank of England also announced that it will expand its quantitative easing program. This comes as a shock, since the last two decisions were accompanied by a staid resolve to keep the rate of quantitative easing steady.
The Financial Times reports on the BOE reasoning behind the decision to expand quantitative easing:
The committee said the world economy remained in recession, though
there have been increasing signs that output in the UK’s main export
markets was stabilising. Financial market strains have eased and banks’
funding conditions have improved a little, although financial
conditions remained fragile.
Clearly, the monetary policy committee feels as though things are still fragile enough to warrant a little more help. The news sent the sterling lower in forex trading, though. After surging higher yesterday, this abrupt change in stance for the BOE sent the U.K. pound lower in currency trading.
| Topic Tags: Bank of England, currency trading, financial market, forex trading, quantitative easing, sterling forex trading, U.K. pound currency trading | |
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