Pound Falls Sharply on BOE Statements

The pound declined today versus multiple important currencies after U.K.’s central bankers stated that quantitative measures may be resumed in the country if the economic conditions fail to improve, adding to the negative sentiment in European markets today.

The pound fell versus the U.S. dollar and the Japanese yen as risk aversion gained strength today in Europe as several important economies in the region are struggling to adjust their national budgets, decreasing appetite for assets in the region as a whole. In the U.K., stocks declined and overseas traders avoided pound-priced equities after the Bank of England affirmed that it may restart its asset purchase program if the British economy face further difficulties, setting the pound to a new record low in 2010 versus the greenback, that gained versus almost all currencies as risk aversion increased its intensity today.

The pound may be affected by an increasing pessimism that has been plaguing Europe since the beginning of this year, and if the economy of its main trading partners don’t accelerate its growth, we may see the pound touching new record lows versus currencies overseas.

GBP/USD traded at 1.5764 as of 19:37 GMT from a previous rate of 1.5887 yesterday. GBP/JPY declined to 140.53 from 144.58.

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