 "Several 20 pound currency notes")
Mark Carney's stimulus package dealt the pound more of a glancing blow than a knockout punch.
While sterling has tumbled versus the dollar since the Bank of England governor announced a suite of measures to support the UK economy, the currency only fell to levels seen three weeks ago. It's still about 2 per cent higher than the 31-year low reached in the aftermath of Britain's vote to exit the European Union in June.
Currency investors are considering the trade-off between stimulus measures that tend to weigh on a currency, and the potential for a rebound should they prove successful. The drop in the pound itself gives the economy another fillip by boosting exports. Options-market gauges show investors are gradually becoming less bearish on sterling's longer-term prospects, and analysts are forecasting a bounceback in the currency in 2017.
"The pound may be falling, but that's not necessarily bad news," said Stephen Jen, the chief executive officer at Eurizon SLJ Capital in London, and a former economist at the International Monetary Fund. "A weaker pound is mostly likely to be part of the intention of the policy. It should support growth and restore balance in the economy, which in the longer term is good news for the economy and the pound."
The pound plunged 1.6 per cent on Thursday after the decision. The level remained well above the 31-year low of $1.2798 set July 6.
Sterling rebounded by as much as 0.5 per cent on Friday before reversing gains after U.S. jobs data came in stronger than analysts envisaged and pushed the dollar higher against all Group-of-10 currencies. The pound was 0.5 per cent lower at $1.3039 as of 3.05 pm in London. The BOE cut interest rates to a record-low 0.25 per cent and announced policies which will expand its balance sheet by as much as £170 billion.
