QE introduced once more to the UK economy
On a day where the Bank of England (BoE) governor Sir Mervyn King said that Britain could be in the grip of the “most serious financial crisis ever” and that “it was crucial to do the right thing” The Monetary policy committee (MPC) decided to inject £75 billion into the UK with their quantitative easing programme in an effort to revive the UK economy.
Yesterday was the first time since November 2009 that the BoE decided to extended QE which suggests that the MPC is growing increasingly concerned about the UK’s economic prospects and rightly so. At the current rate we could be heading back into recession.
For those of you with a requirement to sell the pound you should be made aware that, every time QE has been introduced the pound weakened against most major currencies over the course of the month. Sterling hit a low of 1.02 against the EUR and 1.38 against the USD back in 09.
Yesterday may have been the beginning of a trend which pushes the pound lower up until the end of the year. The biggest concern going forward now is the threat of further QE being introduced in the future.
We witnessed losses for the pound up to 2% in the space of an hour yesterday and I can see sterling exchange rates hitting levels of 1.48 against the USD and even falling back close to 1.10 against the Euro. This even with all the issues that surround the Euro zone sovereign debt crisis.
If you want to safeguard your rate of exchange and take away the stress and hassle of what may occur for sterling exchange rates please contact me on bma@currencies.co.uk and we can explain how easy it is take out a forward contract and give you the peace of mind that you may be looking for.
