The British pound weakened vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.4265 level and was capped around the $1.4495 level. Bank of England Chief Economist Dale reported said the central bank may only need to purchased a €œrelatively small€ amount of corporate bonds as part of its quantitative easing strategy. BoE has purchased ‚¤13 billion in government bonds and ‚¤128 million in corporate bonds to date. Yields on gilts have declined 40-60 basis points since the BoE announced it will purchase government debt. Dale also sees an economic recovery materializing by the end of the year. Chancellor of the Exchequer Darling said the government will likely hold a €œsignificant€ stake in the U.K. banking sector for years to come. The government has injected ‚¤37 billion of capital into major banks and offered insurance against toxic assets worth hundreds of billions more. Data released in the U.K. today saw the Q4 current account deficit narrow more than expected to ‚¤7.6 billion. Prime Minister Brown indicated the government will not implement a broad second fiscal stimulus next month when the Budget statement is released. Cable bids are cited around the US$ 1.4085 level. The euro came off vis-Ã -vis the British pound as the single currency tested bids around the ‚¤0.9275 level and was capped around the ‚¤0.9420 level.
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