The pound slumped against the single currency yesterday, after the Bank of England said it was ready to ease monetary policy further and was willing to take unconventional measures to revive the ailing economy – quantitative easing here we come. Mervyn King stated that once approval has been given, the Bank of England would create cash to buy government and corporate bonds in a bid to boost the wider economy and ease credit conditions. It was also stated that the bank is anticipating the economy will contract all year, hitting a low of minus 4% in the second quarter.
News out of the eurozone was little better as the Spanish government admitted that it may be forced to bailout some of the country’s banks – something they have refused to do up until now.
Investors will take note of the European Central Bank’s monthly report due this morning, along with industrial production figures. There are no major announcements due in the UK today.
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