Four out of nine members of the British Monetary Policy Committee, including governor Mervyn King, voted for additional QE in the UK. More pound printing seems likely in July. Also employment data doesn’t look too positive.
GBP/USD made a sharp move lower before rebounding. The pair fell sharply from around 1.5740 to 1.5650 before getting back to the same place. The bad news had a sharp impact, but it didn’t last.
It is quite uncommon to see the MPC vote against the the governor of the BOE. King voted for an additional 50 billion pounds in bond buying, through the Asset Purchase Facility program. He was joined by the über bear Adam Posen and by David Miles who also has a record for supporting QE. Paul Fisher opted for a more modest 25 billion expansion.
The current program stands on 325 billion. An expansion of 50 billion to 375 billion in July has high chances.
Also the low inflation, reported yesterday, adds to the chances of more QE.
Claimant Count Change (or jobless claims) disappointed with a rise of 8.1K in May, when a drop of 3.1 was predicted. Also last month’s data was bad – a upwards revision from -13.7K to 12.8K.
The unemployment rate in April remained at 8.2% as expected.
For more on the pound, see the GBP USD forecast.
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