Sterling drops as Bank of England ramps up stimulus rhetoric

Today, as the Bank of England continued to ramp up its stimulus rhetoric, Sterling has fallen by one per cent against the Euro to 1.1680 (close to last week's four month low) and the US Dollar (down to 1.5720).

Adam Posen, one of the Bank of England's Monetary Policy Committee, said that the Bank of England should start pumping more money into the economy to avoid copying Japan in the 1990s and falling into a slump. According to the speech given to the Hull and Humber Chamber of Commerce today, Posen said he believed that UK monetary policy should continue to be aggressive about promoting recovery, and subject to further debate, further Quantitative Easing should be undertaken. This resulted in an immediate fall in Sterling's value.

Andrew Scott from currency specialists HiFX commented: "These are some of the most explicit comments we've had from any member of the Bank's committee in favour of the Central Bank providing additional stimulus. This may come as a surprise to some, as the economy is still growing. We are still some way from this view being shared amongst a majority of MPC members, which would be needed for the easing to be approved. Never the less, after last week's central bank comments, traders are very focused on Quantitative Easing, whether here in the UK or in the States".