Sterling began declining ahead of the release of the Bank of England minutes from its latest meeting in October. As soon as they were released, the pound fell further against the dollar and the euro but subsequently rebounded.
The MPC meeting minutes showed that all policy members voted in favour of increasing QE and expanding the Bank of England’s asset-purchase program.
Members voted 9-0 in favour of injecting a further 75 billion pounds into the struggling British economy in hopes of stimulating growth.
“The available indicators suggested that the underlying rate of growth had moderated and would be close to zero in the fourth quarter,” the minutes said. Household spending and exports had slowed and the panel noted concern about the impact of the euro zone’s debt crisis.
The minutes also signalled there could even be more QE and more stimulus.
The over-arching tone of the minutes was dovish and that the economic recovery remains weak, making it difficult to hike the cost of borrowing.
Interest rates are at record lows of 0.5 percent since March 2009.
Britain’s economy grew by just 0.1 percent in the second quarter, while unemployment has risen to a 15-year peak of 8.1 percent and inflation is at a three-year high of 5.2 percent.