Morning Wrap: Pound Declines After BoE Decision

The Pound continued its decline after the Bank of England’s decision to extend its Quantitative Easing policy, as well as its Asset Purchase Programme. Following the decision, the GBPUSD has dropped nearly 200 bps amid speculation the British economy is not recovering as quickly as previously anticipated. The MPC has said that the world economy remains in recession, despite increasing signs that the output in the UK’s export market is stabilizing, and that financial markets are still fragile even with noticeable improvements. European markets closed up again for the second time this week, erasing Tuesday’s and Wednesday’s losses. The recent equities’ rebound, however, is feared to have outpaced company earnings reports and the broader economy.

[B]Pound / Dollar[/B] [B]10-minute Chart[/B]

[U][B]Other News and Data of the Morning:[/B][/U]

• BBA LIBOR: (1 wk) USD: 0.26; EUR: 0.32; GBP: 0.56; JPY: 0.15; CAD: 0.25.
• US SESSION OPEN [unofficial]: DJIA up 23.88 (+0.26%) to 9304.85, S&P up 2.98 (+0.30%) to 1005.70, NASDAQ up 4.85 (+0.24%) to 1997.90.
• [I][B]Bank of Canada[/B][/I] reported no transactions in Term Loans Auction, after C$1 billion offer.
• [I][B]US ICSC Chain Store Sales[/B][/I] for July fall 5.0 percent from the year previous.
• [B][I]ECB TRICHET[/I][/B]: Current interest rates are “appropriate”; recovery sometime in 2010.
• [I][B]Bank of England[/B][/I] plans to buy 1.4 billion Pounds of government bonds at the August 11 auction.
• UK 10-year Gilt jumps as Bank of England unexpectedly boosts debt program, to 3.728.
• EURO SESSION CLOSE [unofficial]: CAC up 19.30 (+0.56%) to 3477.83, DAX up 16.97 (+0.32%) to 5369.98, FTSE up 43.40 (+0.93%) to 4690.53.