The minutes from the Bank of England’s August 6 rate decision didn’t reveal much in the way of new outlooks, but they did highlight one nugget of information that sent the British pound tumbling, though the currency eventually recouped some of the losses later in the day.
Indeed, the Monetary Policy Committee said that there were arguments “in favour of a considerable expansion” of the BOE’s quantitative easing program, but at the same time, “there were also arguments for a more moderate expansion…given that some of the most immediate downside risks to the economy seemed to have receded.” Ultimately, six members of the MPC voted in favor of the implemented proposition to increase the size of the Asset Purchase Facility by £50 billion to a total of £175 billion, but three members, including BOE Governor Mervyn King, dissented in favor of a £75 billion increase. King’s vote suggests that there is potential for the BOE to expand the program even further down the line, and adds to downside risks for the British pound in coming months.
On Thursday, UK retail sales will hit the wires and according to Bloomberg News, the results could reflect a 0.4 percent increase for the month of July. While the BOE has said in the past that they prefer to focus on private surveys rather than this volatile index, surprisingly strong or weak numbers could shake up the British pound. European session traders should be sure to check outDailyFX Analyst David Song’s live analysis and trading of the UK retail sales release, starting at 4:15 ET on Thursday.
[B]Check out the Daily Fundamentals in its entirety for a look at what happened across the majors.
Related Article:[/B] British Pound Weekly Trading Forecast