British Pound Sterling | Currency News Views and Outlook

British Pound Sterling: Analysts speculate on Quantitative Easing - 25bn, 50bn, 350bn, 400bn?

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Category: British Pound Sterling

Published on Friday, 27 January 2012 10:41

Written by Rob Samson

Analysts agree that more quantitative easing will be announced in coming months, the question for exchange rate analysts is the quantity.

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British Pound Sterling (GBP) in US Dollar (USD): 0.14% higher at 1.5714 at 10:32 AM.

British Pound Sterling (GBP) in Euro (EUR): GBPEUR is 0.13% lower at 1.1958.

British Pound Sterling (GBP) in Australian Dollar (AUD): GBPAUD is 0.14% lower at 1.4752.

With the UK economy struggling a host of analysts have forecasted the Bank of England to expand its quantitative easing programme in February and potentially in subsequent months.

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Standard Chartered have given a grim assessment for the UK economy in 2012.

They have forecast three negative quarters for the economy in 2012, and as such they feel the Bank of England should raise its quantitative easing target to GBP 350bn in February and GBP 400bn in May.

These are substantial figures and should they be realised we can be assured of significant weakening in the British pound.

UBS are however less bearish.

This morning UBS say they have lowered their expectation for the size of the next quantitative easing instalment and are now calling for a GBP 25bn - 50bn increase in the asset purchase target in February – down from a GBP75bn expansion previously.

These figures are unlikely to surprise exchange rate markets, indeed, should the smaller number be correct then we could actually see some appreciation in the GBP.