The latest report on inflation out of the United Kingdom was disappointing, and is weighing on the pound. Without inflation to indicate economic growth and a need for tightening, the Bank of England is likely to continue its asset purchase program for a little while longer.
Even though there have been some indications of economic growth for the United Kingdom, the relatively tame inflation rate is preventing the Bank of England from preparing to scale back its asset purchase program. With the BOE likely to continue its quantitative easing efforts until inflation actually becomes a threat, there isn’t a lot to support a higher pound against some of its major counterparts.
In the eurozone, quantitative easing isn’t being used, and there are rumors that the Federal Reserve http://www.federalreserve.gov/ could announce that it will soon begin tapering its own asset purchase program. Only the Bank of Japan is likely to remain more accommodative than the BOE.
There is little to boost the sterling right now, and there could be more declines if the results of the two-day Fed meeting underway right now point to tightening in the United States.
At 15:17 GMT GBP/USD is sown to 1.5893 from the open at 1.5896. EUR/GBP is up to 0.8399 from the open at 0.8388. GBP/JPY is up to 157.8450 from the open at 157.5350.
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