Pound on solid ground, even if more printed
(Reuters) - The pound looks set to climb against the euro even if the Bank of England turns on its printing presses this week and buys more bonds in an attempt to pump money into the struggling economy.
The safe-haven status of sterling is expected to outweigh concerns that such loose monetary policy weakens a currency. Worries about the euro zone will see to that.
High borrowing costs in Italy and Spain and continued concerns about the viability of Greece remaining in the euro zone mean investors may be willing to ignore the perceived wisdom that central bank asset-buying, or quantitative easing, knocks a currency down by increasing supply in the system.
In fact, with any renewed bond-buying programme supporting UK bond prices -- increasing their allure as an alternative to euro zone sovereign debt -- the pound could rise to highs against the euro last seen before Lehman Brothers collapsed in 2008.
http://uk.reuters.com/article/2012/07/03/uk-analysis-pound-idUKLNE86201E20120703
