Sterling has slid sharply over the past two days, although it is worth noting that losses were exacerbated by thin trading activity. GBP/USD fell 50 pips to $1.5402 this afternoon, as investors continued to speculate that the BoE will embark on additional QE to boost the fragile UK economy.

This follows a sharp sell-off on Wednesday, which saw sterling plunge nearly 1.5% on the day after a number of US corporate names sold sterling to rebalance their portfolios. There is a high probability of seeing more QE in the first half of 2012 given the UK’s exposure to the European debt crisis. Although BoE policymakers voted to maintain the bank’s target level of asset purchases at £275 billion, the latest minutes suggested that the bank was prepared to buy more assets from the market to boost the economy.

I wouldn’t be surprised to see some respite for GBP/USD in the short term given the recent sell off, although any gains are likely to be short lived. As a matter of fact analysts at Barclays believe that GBP/USD will hit $1.55 by February, before falling to $1.52 by May.