The pound has advanced in forex trading versus the euro this afternoon (December 6th) on news the Bank of England (BoE) has opted to refrain from a further round of quantitative easing (QE).
This may come as a surprise to some economists, as it had been thought the gloomy economic outlook would prompt a further round of stimulus in a bid to boost growth.
Under QE the BoE creates more money and uses it to buy government bonds, effectively pumping more cash into circulation – which can have a negative impact on the value of sterling.
The BoE's Monetary Policy Committee chose to refrain from increasing the current QE total of £375 billion and also decided to keep interest rates at their historic 0.5 per cent low, which has been the case since March 2009 and will not be a shock to the markets.
At 15:45 GMT, the pound advanced by 0.6 per cent in trading with the euro to £1 buying €1.239.
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