Quant Easing is the printing of money to purchase govt bonds or other securities from investors, as a direct form of injecting liquidity into the economy.
The release of the UK's inflation numbers on Tue 19 May may reiterate this. The BOE is very keen on keeping the inflation numbers' fall in check to avert stagflation.
This is the primary reason for them to expand QE measures by GBP 50 Bn to GBP 125 bn in the last BOE meeting. Following that announcement, the GBP fell but remained support by bouyant stocks.
And on Tue, if a faster than expected decline happens for the Apr CPI numbers (mkt expects 2.3% yoy vs 2.9% previous), then the BOE will see a need to quicken the pace of QE or even increase it, though I doubt this will happen given the laid out schedule for QE needs some doing to complete.
On price action, the long legged doji on the recently concluded week for the cable indicates indecision after a 2 week surge (see weekly chart below).
The 23.6% retracement level shown in the chart also provides reasonable resistance.
A little bit on Technical Analysis for the GBPUSD - Rate of Change and Williams %R on the daily chart, both measures of momentum have shown declines, with the latter, falling into negative territory.
These give support to a weakening trend and certainly shows potential for the pair to head down (see daily chart below).
My call for GBPUSD for the next two weeks (until 29 May 09):
Sell GBPUSD from 1.5255
Stop loss: 1.5375 (above 12 May high)
Take profit: 1.5014 - potential 241 pips profit (above 1.50 psychological support)
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