The Bank of England cut the interest rate down to 0.50% but increased the asset purchase program by £50 bn up to £375 bn. Despite the poor employment stats from the USA, the US Dollar was supported by risk-averse investors, who flee European markets amid the ECB’s interest rate cuts. The British Pound fell below the option level 1.5474, thus closing the week around the 1.5460 low. Therefore, we saw a 259-point decline down to 1.5719.
The MPC meeting minutes revealed no positive news about the UK economic prospects. The manufacturing production keeps showing weakness.
This week started with a moderate rally of the British Pound. The BRC’s retail sales index also contributed to the rally, thus making it gain 1.4% on Tuesday.
According to , in general, last week’s decline changed for a slight recovery seen earlier this week. However, later on, the downtrend resumed. The BoE’s QE3 plan confirms the weakness of the UK economy while the excessive nervousness of the market may suggest further problems for the British Pound.
