MIG Forex Research

Worth bearing in mind that the QE arsenal of both the FED and the Bank of England has run dry. Today will see all $300bn of funds in the US Treasury buyback program exhausted just as yesterday saw the Bank of England hit it's cap of £175bn for its own Asset Purchase Facility. Much of the gyrations in Sterling in the currency market has been dominated by whether the BOE will need to again expand the APF program. Certain rhetoric from MPC members have been suggestive that they will not look for an expansion, whilst the initial Q3 GDP numbers showed all remains not well with UK Plc. UK 10yr yields spiked 42 basis points in the 2 weeks that followed the suggestion that the program has run its course but have since drifted back from 3.78 to 3.60. With currency direction still tied closely to respective intrest rates, the key focus for sterling traders is now on next Friday's MPC meeting. Around two thirds of analysts polled by the Times expect QE to be continued by between £25bn and £50bn. If the latter were to occur, I would be very concerned as to the pound's ability to hold onto the gains it has eeked out on a broad basis since early October.