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British Pound Rebounds Despite Disappointing UK Trade Figures, Start of Quantitative Easing
Wednesday, 11 March 2009 21:09:22 GMT  |  Terri Belkas, Currency Strategist
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The British pound staged a solid rebound as the greenback fell below critical support levels. However, UK news wasn’t necessarily supportive of the currency. First, the UK trade deficit widened to 7.745 billion pounds in January from 7.232 billion pounds in December as total exports fell 5.4 percent as measured by volume from the month prior. Much of the decline was due to waning demand from non-EU countries like the US, Switzerland, and China, as exports to the EU actually grew to 11.287 billion pounds from 10.663 billion. Meanwhile, the Bank of England launched its quantitative easing program in an effort to boost money supply in the UK. The start of the program was deemed as a success as the BOE received 10.5 billion pounds in offers to sell gilts, which was five times more than the central bank had wanted to buy. Ultimately, quantitative easing should bring down medium and long-term interest rates, which could weigh on the British pound. 

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