In the minutes of its February meeting, the BOE said it was reluctant to cut rates further as that could hurt bank profitability but it asked the UK government for permission to begin quantitative ease by buying government bonds and similar assets.

It looks as though the ECB could follow a similar path, They are expected to cut rates to 1.5% at the next meeting and they have been hinting broadly that they too could begin to ease via buying bonds without pushing rates toward zero first.

Cable is consolidating its rebound gains after a tough morning, News that the UK could lose its AAA rating along with the reports on quantitative ease knocked it lower initially but the pound was boosted by heavy buying from the Korean central bank, dealers report. GBP/JPY has also been in demand amid recent yen weakness. That cross has been very steady amid the cross currents of risk aversion and yen weakness.

Cable reached nearly 1.4300 amid heavy GBP short-covering.