The quantitives easing policies could contain the current market sentiment after the recent central banks massive cuts putting pressure on the British pound after the last week BOE cutting interest rate by another .5% to be just .5% and its announcement that it is ready to buy further governmental gilts to afford the governmental financing requirements to stimulate the economy. The cable has found very easy this time to go lower than 1.4. I have mentioned in my recent analyses that this quantitive easing policy should put pressure on the currency from increasing the supplied money from a side and from increasing the budget deficit from another side which can threat total economy creditability and the currency buying value.
In this same time, the European finance ministers have rejected new stimulation packages in Brussels in spite of the US encouraging for these actions which should increase the government's role changing the current fiscal structure position in the face of the crisis. This European refusing of widening their current budget liabilities could underpin the single currency versus the pound and the greenback on the market focusing on the central banks actions after reaching very low interest rate levels and this sentiment can continue supporting the single currency as this current European conservative position comparing with US.
There was no data to move the currency market yesterday but we have later this week the release of US retails sales of Feb which is expected to fall by .4% monthly and also the US trade balance deficit which is expected to be shrunk to 38.2b$ in Jan.
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FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com