Sterling fell sharply against the dollar and the euro after the Bank of England released minutes of its policy meeting earlier this month. The minutes revealed that two policymakers voted in favour of a bigger expansion to the bank’s asset purchase program, increasing the possibility that the central bank will opt for further QE (quantitative easing) later in the year.
According to the minutes, the two members of the banks’ Monetary Policy Committee (MPC) were Adam Posen and David Miles, who both dissented from the panel’s decision to expand QE by 50 billion pounds to a total of 325 billion pounds, calling instead for a 75 billion pound expansion.
Quantitative easing results in a weakening of the British currency, due to printing more money.
GBPUSD fell after the minutes were released today, from 1.5805 to 1.5694.
EURGBP rose to a two-month high of 0.8432 from 0.8380.