With the British economy teetering on another recession, market observers are anticipating new stimulus measures from the Bank of England, driving the British pound currency, along with a related exchange traded fund, to a three-year low.
The CurrencyShares British Pound Sterling Trust (NYSEArca: FXB) dropped 4.4% over the past three months.
The sterling pound hit a three-year low against the dollar this week as speculators increased bets that the central bank will reactive its quantitative easing policies in an attempt to stimulate the struggling economy, reports Gregor Stuart Hunter for The National.
The pound currently trades at around 1.53 U.S. dollars.
Three members of the Bank of England’s rate-setting committee have called for an expansion of quantitative easing measures. Moreover, the income Bank of England governor, Mark Carney, is expected to favor aggressive actions to stimulate the economy.
“While the recent fall probably partly reflects concerns about inflation and expected changes in monetary policy – the so-called ‘Carney short’ – it has also reflected the growing view that the UK’s economic outlook is nearly as bad as the euro zone’s,” analysts from Capital Economics said.