Sterling rises while the Euro plummets as the BOE eyes a halt to QE

The British pound rose against the greenback and the euro on Wednesday after comments on inflation by a Bank of England policymaker, in-turn that has spurred speculation that the central bank may end the quantitative easing program next week. BoE policy board member Andrew Sentance said it may be difficult to keep inflation on target if import and services prices keep rising. He also said that the British economy, which on Tuesday was shown to have just made it out of recession, was facing opposing pressures which the central bank would have to consider in its Inflation Report next month.

The market took the comments to suggest an imminent end to the BoE's 200 billion pound asset-buying plan, but analysts said they did little to change the view that interest rate rises will not follow until the second half of the year at the earliest."We think that as ever, the BoE will have a 'steady-as-it-goes' policy," said Phyllis Papadavid, currency strategist at Societe Generale in London. The GBP/USD is currently trading at $1.6208 as of 7:03am, GMT, with a bullish trend.

The dollar gained against yen and the euro after U.S. President Barack Obama proposed tax incentives to generate growth in the world’s biggest economy, damping the demand for Japan’s currency. “The dollar-yen will be supported as long as Asian stocks hold up after U.S. stocks went up a bit and the Federal Open Market Committee meeting caused the dollar to be bought back,” Akane Vallery Uchida, a currency strategist at Royal Bank of Scotland Group Plc in Tokyo, wrote in a research note today. President Obama was delivering his first State of the Union address on Wednesday in which he called for an extension of tax incentives worth $38 billion over this year and encouraged businesses to accelerate equipment purchases and eliminate capital gains taxes on small business investments. The USD/JPY is currently trading at 90.33 as of 7:42am, GMT, with a bullish trend.

The greenback rose against the euro on Thursday on signs the Federal Reserve is feeling confident about a recovery, while Asian equities were on a high after a consistent losses last week. One hawkish Fed member surprised the market by dissenting to a decision to remove a phrase from a statement saying rates would be kept low for an "extended period." Some in the market are convinced that the Fed will keep rates low for an extended period of time yet on the other hand, there will be a few economists taking signals that within the Fed a gradual movement towards a more normal monetary policy stance is starting to emerge. The EUR/USD is currently trading at $1.4025 as of 7:51am, GMT, with a bullish trend.

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