Brexit makes the BoE look more like the ECB

The Bank of England’s post-Brexit economic recovery plan got off to a stumbling start on Tuesday when it was unable to buy as many government bonds as it needed from major City investors.

“But more easing should mean more sterling weakness to come, whatever happens to the economy”.

A week after the Bank of England cut interest rates and began a stimulus program of quantitative easing to spur the economy, there is growing debate that it should back away from too quick an intervention.

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The unexpectedly low uptake of the buyback offer sparked a sharp reaction in the market, with yields on long-dated government bonds falling to record lows.

The Bank of England said last week it would hold three gilt reverse auctions each week between now and the end of October, buying baskets of gilts with maturities of 3-7 years, 7-15 years and more than 15 years.

HSBC analyst David Bloom and his team said in a note that the sterling will drop even more over the coming months.

Interest rates were cut for the first time since 2009 in August – however just month’s ago the United Kingdom was expecting to see a rise with BoE governor Mark Carney laying the groundwork.

On the second day of its new program, the United Kingdom central bank said it could only buy £1.12 billion ($1.5 billion) of gilts.

New Zealand’s dollar was steady despite expectations that the Reserve Bank of New Zealand will cut interest rates by 25 basis points to 2.00 percent on Thursday, when regional forex liquidity is likely to be thinner than usual due to a public holiday in Japan.

The pound has not been that weak against the dollar since 1985, when chancellor of the exchequer Geoffrey Howe let the pound float and the US Fed pushed up the dollar by raising US interest rates above 10% in a drive to stamp out inflation.

McCafferty voted in favour of last week’s rate cut to 0.25%, but opposed the Bank’s new £60bn quantitative easing scheme.

By mid-afternoon on Tuesday, the pound was down 0.53% against the dollar and 0.38% lower against the euro – exchanging hands at $1.2969 and €1.1706 respectively.

While the £50 million the BOE didn’t buy on.