Quantitative Easing Tomorrow?

What will the Bank of England do with QE? Will they won’t they?

With a 6-3 vote last month concerning further Quantitative Easing for the UK economy could we see further QE tomorrow afternoon. One of the 3 members of the Monetary Policy Committee included Governor Mervyn King who wanted £25bn. If the Bank of England does opt for further QE we could see Sterling drop from its current levels against the Euro.

Behind the scenes it could be argued that the BoE are trying to create an export led recovery and therefore artificially weakening Sterling particularly against the Euro and US Dollar. With GBPEUR exchange rates close to the lowest level seen since October 2011 and GBPUSD rates close to a 3 year low my feeling is that things will get worse before they get better.

This month is a crucial time for Sterling as if the GDP figures come in a negative we’ll be in line for a triple dip recession which can only be detrimental to the Pound so if you have Sterling to sell you may wish to consider doing something before the end of the month. However, if this weakening of Sterling does continue will this be the answer to the UK’s GDP troubles? Let me know your thoughts as I’d be interested to hear what you have to say. Email me Tom Holian [email protected]

Euro zone struggles in Q4 2012
A second estimate published by EU statistics agency Eurostat claimed that the Euro zone’s GDP was measured at -0.6% in the final quarter of 2012. Issues surrounding the Italian elections has weighed on the single currency during the week and uncertainty still remains. With the ECB due to meet shortly there is little chance of a rate cut but keep an ear out for what Draghi will say shortly after the meeting.

To be kept updated with the events surrounding the BoE & ECB interest rate decision feel free to send me an email Tom Holian [email protected]