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Bank of England’s Decisions Affect Pound’s Performance

March 4, 2010 at 23:24 by Jan Baros

Great Britain poundThe pound remained bearish this week as market sentiment towards assets in the U.K. didn’t manage to improve, after interest rates remained at a record low in the country, according to what most analysts expected to happen for today’s decisions.

After interest rates were maintained at 0.5 percent by the Bank of England this Thursday, the pound didn’t manage to revert a negative trend versus most of its main trading partners currencies, as the economic scenario overseas remain considerably better internationally than the investment conditions in the U.K. The euro was the only important currency to lose versus the pound after the ECB announced that interest rates are adequate for the present economic situation in the bloc, declining odds that rate hikes will follow in the next months, thing which is unlikely to happen in the U.K. as well.

The pound is very likely to find hard times ahead in the following months, with an eventual resuming of BOE’s asset-purchase program, affecting severely the pound’s rates if confirmed. As long as the Bank of England remains prudent and analyzes carefully the next steps to be taken, the pound may not fall sharply, but to expect a bullish pattern is out of question for the time being.

GBP/USD fell slightly in the intraday comparison at 1.5031 as of 21:21 from 1.5089.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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