Daily Archives: February 9, 2012
As the old saying goes if you put your head above the parapet, prepare to be shot! Against my predictions we have seen further QE but the pound has gained about half a cent from today’s earlier lows. This is more than likely due to the fact this was expected and it wasnt perhaps as bad as the possible £75bn of asset purchases some expected. I did point out however the status quo could lead to sterling strength and this is what has happened..
Utilising QE will help the UK’s slow road to recovery to remain loosely on track and should mean that if we do enter any recession this year it should not be too bad. The Eurozone as we know is one of the biggest threats to not just the UK’s recovery but also the global recovery. This batch of QE should support the pound for what may still be a very challenging year ahead due to overseas issues.
Always expect the unexpected on the markets. We have had QE but the pound is currently trading at the high of the day against most currencies!
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Following on from Jonathan’s post and to show just how undecided even the most ‘in the know’ people are, I personally feel we will see QE at 12:00 and some Sterling weakness….. Who will come out on top with this one, myself or Jonathan?????
Either way I feel some sort of announcement will be made surrounding it which in turn may lead to a tricky afternoon for Sterling.
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Good Morning Readers, today has the potential to be a very busy day for anyone buying or selling the pound as all eyes focus on the Bank of England (BoE) and whether or not they will embark on yet more QE. Quantitative Easing essentially weakens the currency concerned as the money supply is increased and the last two times this has been announced the pound has tumbled by a good few cents and pence against practically every currency! QE is a ‘shot in the arm’ for an economy and many would argue that it is just what the UK needs at the moment. This site is all about our opinions and forecasts and I personally don’t think we will see QE today. We could see the pound make some small gains because of this. If you are looking at doing any deal buying or selling the pound I would plan for all eventualities however… Hope for the Best, Plan for the Worst! You can speak to me on firstname.lastname@example.org to find out all of your options ahead of today’s announcements.
Going against the grain I think there is a good chance we will not see further QE today. Even though there is a general concensus that more QE is necessary at some stage – Mervyn King, the Governor of the BoE said so – a recent run of data for the start of this year has shown improvements in manufacturing and construction. PMI data has reported readings above 50 indicating growth. If I were an MPC member I would vote for no change in the current asset purchases programme until we see next months data. If I am right we could see the pound strengthen as the pound weakened yesterday on the back of anticipation of further QE (like it did in January). If I am wrong I would not expect any major change as this has to an extent already been priced in to the value of sterling.
Looking to the Eurozone however I would not be suprised to see an interest rate cut. The Eurozone looks more likely to be about to enter a dangerous recession because of the economies that are suffering. I think the ECB therefore needs to cut rates to promote growth because that is what is lacking and damaging not just the ‘PIGS’ but the rest of the Eurozone and the world.
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