Following the Bank of England decision this morning, pound sterling is remaining supported – trading at 1.5864 against the US dollar. The slight pickup is due to central bankers’ decision to pump another 50 billion pound (or almost $80 billion) into the UK economy through quantitative easing methods.  The measures taken by the nine-member committee will effectively increase the current asset purchase facility to 325 billion pounds – allowing further currency to be pumped into the system.  The news was well received by the market helping the currency to rise from support at 1.5800 in the New York morning.

While holding benchmark interest rates at 0.50%, the Bank of England sided with taking action against “the drag from tight credit conditions” in order to boost economic growth.  Policymakers additionally noted that “headwinds” continue to exist as a result of “fiscal consolidation” on the heels of the European financial crisis, as the country’s growth outlook exhibited “a significant margin of slack” that is “likely to persist”.

Incidentally, Bank of England Governor Mervyn King and his fellow policymakers are looking to keep nascent signs of growth alive in the UK economy.  Just recently, economic reports revealed an uptick in manufacturing and construction while services output expanded at the fastest pace in the last 10 months last month.  Nonetheless, the UK economy was unable to avert contraction – with economic growth declining by 0.2% in the fourth quarter of 2011.  Forecasts are for the country to experience no expansion at all this year.

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