The team of Bank of AmericaMerrill Lynch j

Unlike the European Central Bank, the Bank of England (BoE) yesterday created the surprise. The monetary policy Committee decided to increase its purchasing program of Government securities on the market, for the porter to 175 billion, 50 billion pounds as it is had been authorized by the Ministry of finance. Experts were divided on this subject and those who believed in a strengthening of the non-conventional measures did not envisage that the Bank does so also generously.

Though it had slipped to the announcement of the launch of the programme of acquisition of assets, on 5 March, Sterling yesterday gave ground. However, its decline was much more pronounced than five months ago. Britannique currency lost 1.29, to 1,6773 dollar at the end of European session, while the euro rose 0.89 0,8555 book.

"Quantitative easing" measures, to purchase securities on the market, are considered as generators of inflation in the term. This explains that they generally have a negative impact on the currency. However, this impact is only limited and mostly annoyed by other factors.

Indeed, the sterling livre is appreciated by 19 against the greenback since the implementation of the special apparatus of the BoE, while the euro slipped by almost 4 against the currency of revel. At the end of 2008, the British currency had almost reached parity with the single currency and some were even the authorities let spin the book to support the economy. The trend was upset from the month of March, when the encouraging signals on the economy have multiplied. "The news about the United Kingdom have improved in recent months and leading indicators show that the country could return to growth in the second half," said James Knightley, at ING, while stressing the persistance of many areas of shadow.

Favourable statistics

The correction of the pound sterling, yesterday indeed was amplified because of the strong performance of recent days, favorisée by favourable statistics. The British currency went five straight upward sessions, on the threshold of 1.70 dollar for the first time since October 2008. Indices (PMI) activity in the industry and services were better than expected and above 50 points, signs of an economic boom. Real estate and consumer confidence have also been sources of good surprises. On the other hand, the results of HSBC and Barclays have reassured. In view of the weight of the financial sector in the British economy, the currency has benefited from these publications.

The meeting of the Bank of England has also affected the pound sterling, yesterday, to the extent it has changed expectations of monetary policy. "Before this appointment, the market considered that the first round of screw would take place in mid-2010;" "this scenario has been swept", note the Barclays team. In other words, the argument of increased interest rates on a relatively close horizon is evaporated. The team of Bank of America-Merrill Lynch j. that this factor will be important, but that it is too early to take it into account. Bank strategists expect a continuation of the assessment of the British currency this year, 1.76 dollar in the fourth quarter. The quarterly report of the BoE inflation, next week, could create a stir on the foreign exchange market.