British Pound Continues to Slip After BoE's QE Extension Announcement

GBP extended its recent losses, with Cable recording 1.6724 lows, while EUR-GBP pushed up to 0.8590 highs. GBP is suffering from Thursday’s surprise increase in the BoE quantitative easing program, which exceeded the most bearish expectations. Meanwhile, today’s earnings result from RBS also added to the offer intra-day after it said that its results were likely to be poor for the next two years after reporting a net loss of GBP 1 bln for the first half of 2009. Cable stops are noted under 1.6700, while there is heavy hedge fund demand for EUR-GBP strikes between 0.8580 and 0.8600. GBP is expected to remain heavy after yesterday’s weak assessment from the BoE, while some analyst suspect that the surprise move could have been a move to keep the level of GBP pressured. Next week’s BoE Inflation Report will shed more light on the Bank’s outlook, which based on Thursday’s statement should remain cautious.