Sterling Slumps Following Split Bank Of England QE Vote

Published: Wednesday, 20 February 2013 15:00 BST - Written by John Cameron

STORY LINK Sterling Slumps Following Split Bank Of England QE Vote

A lot of column inches have been written in recent weeks concerning the next Governor of the Bank of England, Mark Carney, but it was the current incumbent of the top job at The Old Lady of Threadneedle Street who stole the limelight today. This morning’s minutes of this month’s Bank of England policy meeting revealed that three of the nine men committee, including Governor Mervyn King, had voted in favour of increasing the £375bn which has already been allocated to the UK’s Quantitative Easing programme.

The news came as a surprise to investors – in recent months the vote has been split 8-1 against more QE, so a shift in the balance of opinion amongst the Bank’s MPC appears to be taking place. The 6-3 vote caused market participants to shift their funds out of Sterling-denominated assets in an attempt to protect their holdings against the effects of a likely ramping up of QE later this year. This action sent the Pound all the way down to significant lows against several major currencies; the Pound US Dollar exchange rate (currency : GBP USD) tumbled to its lowest level 9th January 2012, touching 1.5282 in the aftermath of the release. Meanwhile, the Pound Swiss Franc exchange rate (currency : GBP CHF) headed all the way down 1.4072 – the lowest level for the pair since the immediate aftermath of the Swiss National Bank’s introduction of its minimum floor for EUR CHF of 1.2000 during the Autumn of 2011.

On a brighter note, this morning’s UK employment data, released at the same time as the Bank of England minutes, revealed that there was a reduction in the number of unemployment claimants of some 12,500 last month. This was well ahead of analysts’ expectations of a 5,500 drop. However, the positive UK jobs data wasn’t enough to stop the Pound Sterling being the worst-performing of the sixteen most-actively traded global currencies on the day, with the exception of the New Zealand Dollar.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts