British Pound Sterling | Currency News Views and Outlook

British Pound Sterling: Currency down vs EUR, AUD as Posen talks up the prospect of more money printing

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Category: British Pound Sterling

Published on Tuesday, 24 January 2012 09:58

Written by Rob Samson

The pound is likely to come under further pressure as investors continue to price in further quantitative easing.

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British Pound Sterling (GBP) in Euro (EUR): GBPEUR is 0.09% lower on the day at 1.1947.

British Pound Sterling (GBP) in US Dollar (USD): GBPUSD is 0.19% lower at 1.5539.

British Pound Sterling (GBP) in Australian Dollar (AUD): GBPAUD is 0.36% lower at 1.4844.

Overnight, the pound edged higher against the US dollar, buoyed by some optimistic rhetoric coming out of the meeting of European Finance Ministers

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"Also supporting the pound (vs US dollar) were comments from the MPC's Adam Posen who said he and 'most of the MPC' believe that the UK will return to roughly pre-crisis productivity growth trends. He also warned that 'lack of confidence' is keeping the economy down, and it was right that the BoE conducted QE to stop inflation from falling too low," says a morning exchange rate note from IG Markets.

The IG Market analysis does not necessarily support the figures this morning which show the British pound down against the majority of major currencies it trades against.

And this is in fact because of what Posen said; essentially he paved the way for more money printing which is pound-negative as supply starts to outstrip demand.

Gareth Berry at UBS says:

"Bank of England MPC member Posen said he and ‘most of the MPC’ believe that the UK will return to roughly pre-crisis productivity growth trends.

"He also warned that ‘lack of confidence’ is keeping the economy down and it was right that the BoE conducted QE to stop inflation from falling too low."

Ahead on Tuesday, fiscal figures will be out − fiscal slippage is a key issue for the UK government and a crucial factor in determining whether the UK keeps its AAA rating.