The British pound depreciated vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.4035 level and was capped around the $1.4230 level. As expected, Bank of England€™s Monetary Policy Committee reduced its key interest rate by 50bps to 0.50%. More importantly, however, Bank of England reported the U.K. Treasury will permit the central bank to purchase up to ‚¤150 billion in assets to grow the money supply. Chancellor of the Exchequer Darling indicated at least ‚¤50 billion must be utilized to purchase private-sector assets. This amounts to a de facto quantitative easing policy and the BoE will purchase up to ‚¤75 billion in gilts over the next three months. Notably, Darling also said the government won€™t use the BoE€™s operations as an excuse to issue more debt and make long-term financing needs less manageable. Data released in the U.K. today saw Halifax January house prices declined 2.3% m/m and 17.7% y/y. Cable bids are cited around the US$ 1.3740 level. The euro moved lower vis-Ã -vis the British pound as the single currency tested bids around the ‚¤0.8850 level and was capped around the ‚¤0.8940 level.
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