The British pound rallied against the euro, Swiss franc, and Japanese yen on Friday, recouping some of the losses accumulated on Thursday after the Bank of England announced that they decided to expand their quantitative easing (QE) program. However, the currency continued to rack up losses against the ultra-strong US dollar, as GBPUSD tumbled for a test of the June 3 high of 1.6662. Looking to the UK data on hand, producer output prices unexpectedly rose in July at a rate of 0.3 percent while input prices declined 1.4 percent, suggesting that the recession may be easing enough for companies to charge customers more in an attempt to improve profit margins. Nevertheless, as mentioned yesterday, with the BOE adding to their QE program and the ECB striking a neutral tone, there appears to be fundamental upside potential for EURGBP.
