The Pound Sterling lost ground versus other major currencies in London trading today following the release of a report issued by the Bank of England which opened the door for additional monetary easing. The quarterly Inflation Report revealed that the Bank of England is predicting a sharp pull back on inflation, below the set target. One Bank of England official suggested that additional easing of liquidity may become necessary. That statement sent short Sterling rate futures markedly higher and the Pound Sterling lower as forex markets scurried to set prices within the relaxed monetary policy.
In early afternoon trading, the Pound Sterling lost 1.41% versus the Euro, trading at 90.10 Pence; it also lost 1.04% versus the U.S. Dollar, trading at $1.4363.
The U.S. Dollar lost some of yesterday’s gains while forex traders and investors scrutinized the most recent U.S. financial markets and bank rescue plan. The consensus among investors was that, while the American plan which was unveiled yesterday is believed to be enough to staunch the profuse bleeding in the banking sector, it nonetheless neglected to meet the market’s high expectations. Furthermore, investors and analysts alike want to see fresh information, not the same old rhetoric.