Pound Droops Versus Euro As EU Prepares To Recapitalize Its Banks

The pound is mixed this morning, gaining against the broadly weaker dollar, but consolidating against the euro on speculation Europe will tackle its debt crisis. The single region currency gained across the board before European Commission President Jose Barroso presents proposals on bank recapitalization as Germany and France pledged to work out a plan in November.  Looking ahead to today, the visible trade deficit figures are published at 9:30, with the expectations for the deficit to have narrowed to 8.8 billion pounds in August from 8.9 billion in the previous month. Separately, Bank of England policymaker Charles Bean said to the Guardian newspaper that MPC is doing all it can to respond to a sharp deterioration in the economic climate. The BoE expanded its asset purchase program by 75 billion pounds and left the base rate unchanged at 0.5% on their October meeting. The shift in the BoE’s position came in response to the sharp slowdown in the economic activity in the UK and rest of the world.  Mr. Bean also stated that should the UK’s economic picture deteriorate further the central bank would not hesitate in increasing the asset purchase program.