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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