The MPC voted in a 6-3 split to extend quantitative easing by £50bn it was revealed yesterday. The 3 dissenters, Messrs Besley, Miles and Governor King wanted to instead increase the total by £75bn. This particular group of 3 is interesting as it contains the newest member of the MPC (Miles), a member who was making his final decision on the committee (Besley) and the Governor. Sterling immediately dived off its overnight highs including losing the 1.17 handle against the euro and dripping back towards 1.15.

GBPEUR is stuck in a range at the moment and tests to the downside and upside have both been rejected quickly. This will move violently soon and hammer out a new range. My money says lower.

Risky assets were able to make up lost ground as US equities managed to close in positive territory after taking a sharp dip at the open. This was largely attributed to the news that the Shanghai Composite, the main stock exchange in China, fell by 4.95% in trade yesterday pushing it below 20% off the high of the recent rally and therefore into a theoretical ‘bear market’. It has however recovered overnight and is, at the time of writing, 4.6% higher.

Retail sales from the UK and Philly Fed manufacturing are the only tier 1 pieces of data today and therefore we will be looking for equity markets for guidance in the world of currencies.

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