British Pound Sterling | Currency News Views and Outlook

British Pound Sterling: Currency faces 'another slug of QE' of 75bn GBP should Posen have his way

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Category: British Pound Sterling

Published on Friday, 03 February 2012 09:57

Written by Will Peters

Overnight the British pound gave up some of its recent ground as participants tread water ahead of tonight’s January non-farm payrolls report.

That said, markets are slightly higher at present, providing support to GBPUSD. This morning the value of the British Pound Sterling (GBP) in Euro (EUR) (GBPEUR) is 0.08% higher at 1.2038.

The British Pound Sterling (GBP) in US Dollar (USD) (GBPUSD) is 0.29% higher at 1.5853, while the British Pound Sterling (GBP) in Australian Dollar (AUD) (GBPAUD) is at 1.4801.

Bank of England MPC member Posen said that he would favour 'another slug of QE' to the tune of 75 bn GBP.

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He also mentioned that the MPC has talked about purchasing assets beyond gilts, especially to help small and medium-sized enterprises.

"We believe this could suggest some purchases of corporate bonds, but these are early stages and we would wait for details at the next BoE meeting," says Gareth Berry at UBS.

Posen also said the world must break away from the notion of being in an 'austerity competition'.

He added that the Bank of England should create a vehicle to securitise small business loans.

In recent sessions, the pound has surged against the USD as improving sentiment has seen traders willing to increase exposures to risker asset classes.

However, as is often the case in the lead up to ‘non-farms Friday’, many traders seem to be sitting on the sidelines.

Adding to the pound’s slight drift was UK construction PMI that came in softer than expected at 51.4, versus a consensus of 52.5 and a previous reading of 53.2.