There was little change in GBP/USD this morning with the pair hovering near $1.5900. The British Retail Consortium (BRC) shop price index rose slightly to 1.9% in September, the highest level in five months. A jump in the cost of food was the main driver behind the price increases after food inflation rose by 4% compared to a year ago. The price of agricultural commodities like wheat, sugar and cotton have risen dramatically this year and the effect is starting to filter through to the consumer. Sterling has been able to make robust gains against the US dollar in recent weeks on the view that the Fed is moving towards further quantitative easing (QE). However, sterling has underperformed the euro over fears that the Bank of England (BoE) will also implement its own form of QE eventually. In my view, it seems unlikely that the BoE will expand its asset purchase facility anytime soon as inflation in the British economy remains uncomfortably high at 3.1%. Additional easing expands the domestic monetary supply, which would add inflationary pressures to the economy. The unconventional policy would also weaken sterling, raising the cost to bring goods into the country. This would result in inflation being imported from other nations. The BoE will meet tomorrow to make its policy decision, however the details of the discussion between policy members will only be known after the minutes are released on 20 October. David Choe, London