Skip to main content

BOE has the power but does it have the will to send the GBP/USD closer to 1.30?

In my humble opinion the Bank of England (BOE) is always too neglectful of it own currency. They might argue, that they do not even attempt to target the exchange rate and of course they are not empowered to do so, in terms of the reserves that they have at their disposal. That is true, but the policy of benign neglect in that regard is an issue for an economy that is so reliant on imports, from oil to oranges. Just look at the size of the UK trade deficit and you will see what I mean. So, in my view, one way to try and combat what has seemingly become embedded UK inflation is via the exchange rate. A rise of 10-20% in the GBP/USD would go along way in alleviating the import led cost price pressure that besets the UK. So, with that in mind I turn to the next big Central Bank policy decision due today. At 12pm the BOE . It seems we are likely to get a hawkish hold, more than perhaps a dovish one like we got from the Fed last night. Naturally, that fed shift will not go unnoticed by the MPC this morning, so it remains to be seen just what the BOE policy statement will hold. Meantime, the GBP/USD has recaptured the uptrend that saw its reach 1.2733 on November 29. It is now up to the BOE to see if they  can push it higher still. The GBP/USD is right now on session highs, at around 1.2669
 

Ready to Get Started?

Start here. Join 2.9M Libertex users around the world!