Commerzbank: British pound will continue to decline

Analysts said Commerzbank, the British pound may continue to decline if the rate of inflation will continue to rise above forecasts. This will trigger the growth of concern over the fact that the Bank of England can not find the means to combat rising prices. The next report on inflation in the UK will be published on September 15. The Bank believes that these data will be of paramount importance. There is a risk that the credibility of the Bank of England will be further undermined if the following data on inflation are higher than projections. August 6 monetary authorities announced an expansion program of buying assets on an additional 50 billion pounds in order to stimulate the economy out of recession, which turned out to be deeper than previously thought. August 12th Governor of the Bank of England Mervyn King said that inflation could fall more than 1% percent below the target level of the bank, which is 2%. In July, inflation was 1.8%, which exceeded analysts' average forecast of 1.5%. As noted in Commerzbank, while other central banks are beginning to consider the possibility of exit from the policy of quantitative easing, the Bank of England, by contrast, holds additional measures for its expansion. This can not contribute to the growth of concerns about the credibility of the bank. And people doubting the correctness of their assessments require risk premiums, which leads to a weakening of the British currency. This month the pound has fallen by 3% against the euro - this is the most significant decrease among 16 major currencies. Now the euro / pound is trading at 0.8804.