Pound tumbles as BoE hands QE income to Treasury
City Index November 9, 2012 9:15 PM
<p>Sterling has fallen in forex trading as the Bank of England prepares to hand interest earned on quantitative easing to the Treasury.</p>
The pound has taken a tumble versus its major trading partners in forex trading this afternoon (November 9th) as the Bank of England (BoE) prepares to hand over interest earned on certain government debts to the Treasury.
A total of £375 billion in gilts are owned by the BoE on account of quantitative easing (QE) – a policy of buying debt to boost the economy.
The transfer will slash the government's borrowing needs and the net debt it reports in its financial accounts.
Government debt has been purchased by the BoE from the market with newly-printed cash as part of QE since March 2009.
As of March 2012, the central bank held £24 billion in cash from government interest payments – and this figure is expected to rise to £35 billion by March 2013.
At 15:15 GMT, the pound had depreciated versus the dollar to £1 buying $1.593, while it lost 0.1 per cent against the euro, falling to €1.252.
Find out about the pound and forex trading at City Index.