London, United Kingdom (PressExposure) October 15, 2009 -- Lower-than-expected UK inflation figures for the month of September have increased the likelihood that the Bank of England will expand its policy of quantitative easing according to sources close to "Zen International".
Consumer prices in Europe's second-largest economy rose 1.1% from a year earlier against general market expectations of 1.3%. The news, combined with a statement from the British Chambers of commerce suggesting that the Bank of England should increase its bond purchase program by up to Â£25bn helped to prompt a significant decline in sterling's value against a basket of currencies.
"Zen International" , which has recently reiterated its assertion that the UK economy faces the biggest challenges to a sustained recovery owing to the level of consumer indebtedness, suggested that the Bank of England is now pursuing a policy of benign neglect toward the currency.
The foreign exchange markets appear to be in agreement and have consequently sold the pound heavily in recent weeks. The Asian-based boutique brokerage advised clients needing to hold paper currencies to diversify into commodity currencies like the Australian or the Canadian dollars. Sources close to"Zen International" say that the firm is skeptical of the so-called recovery in UK home prices and continues to advise clients looking to diversify into hard assets to regard the UK property market as off-limits.
"Zen International" analysts believe that even a further expansion of the quantitative easing policy is unlikely to secure the UK's exit from its worst recession since the second world war.