Sterling appreciates as the BOE may halt the QE programme

The British Pound rose the most in more than eight months against the euro on speculation policy makers will pause their bond-buying program as the economy shows signs of recovering from the recession. Sterling also jumped versus the dollar, as the Financial Times cited Bank of England Markets Director Paul Fisher as saying policy makers would prefer to pause asset purchases, giving themselves the option of “doing more later,” rather than stopping them. Rising asset prices and improved confidence may be signs the program is working, Deputy Governor Charles Bean said two days ago. “If the market senses that unemployment and quantitative- easing supply measures are turning, the bears will cut and run,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “Bean catalyzed some bears into profit taking after comments on gradually removing the stimulus on pickup.” The GBP/USD is currently trading at $1.6270 as of 21:30PM, London Time.

Goldman Sachs Group quarterly earnings nearly quadrupled, topping expectations, but its shares fell on disappointment that so much of the profit came from trading gains that might not be sustainable. The firm, which was already Wall Street's largest investment bank before the financial crisis and has become even more dominant as some rivals have fallen by the wayside, stayed on pace to hand out more than $20 billion (12 billion pounds) in yearend bonuses. Goldman Sachs Chief Financial Officer Viniar said results lagged behind the second quarter's record earnings in part because of the summer downturn in the mergers and acquisitions business. He said on a conference call that the calendar for fourth-quarter equity underwriting appeared robust.

Former Federal Reserve Chairman Alan Greenspan said he’s not “overly concerned” about the recent weakening of the U.S. dollar, while warning of long-term costs to the country and its currency from the rising national debt. I’m not overly concerned about the most recent decline in the dollar,” which has returned to its value preceding the financial crisis, Greenspan said today at a Council on Foreign Relations forum in New York. At the same time, he warned it may become increasingly difficult to finance the federal debt. Throughout U.S. history, the capacity of the government to Finance the Debt has provided a “cushion” that made the dollar “such an important currency in the world,” he said. The EUR/USD is currently trading at $1.4945 as of 22:10PM, London Time.

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