The British pound was the weakest of the majors, falling 2 percent against the New Zealand dollar and more than 1 percent versus the Japanese yen, Australian dollar, and US dollar, as gilts climbed and sent yields lower. The moves came days after the Bank of England expanded their quantitative easing (QE) program by £50 billion up to £175 billion. Indeed, recent financial data has shown that lending to non-financial corporations fell a record £14.7 billion during Q2 compared to Q1 while the annual rate of M4 money supply growth (excluding intermediate Offshore Financial Centers) fell 0.7 percentage points to 3.1 percent in Q2. All of this suggests that the central bank’s £125 billion worth of asset purchases haven’t had the desired effects of boosting money supply and increasing lending, but throwing more money at the issue seems to be a very risky bet. That said, GBPUSD ended Monday just above key support at 1.6450 while 240-minute and 60-minute RSI remained oversold, which indicates potential for a bounce in the pair overnight.
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