GBP/USD Daily Commentary for 5.7.09

The Pound is experienced relative weakness across the board after the BOE announced it will add $50 billion to its present quantitative easing operation to make a grand total of $125 billion. While analysts expected the BOE to keep its benchmark rate unchanged at .50%, the additional funds for quantitative easing caught investors a bit off-guard. Boosting quantitative easing could indicate that deflationary pressures are stronger than expected, meaning the British economy is still facing some unforeseen difficulties. The Cable pulled back from its rally on strong volume in response to the news.