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According to a story carried by the Sunday Times, the Bank of England (BOE) Governor Andrew Bailey held a meeting with heads of banks at the end of June, per Reuters.

At the meeting, they discussed negative rates in which Bailey reportedly said “every tool they have is on the table”.

The British newspaper also reported that Governor Bailey had written a letter to lenders warning them of the challenges of negative interest rates.

The letter read, “negative rates were one of the potential tools under active review if the MPC decided that more stimulus was needed to achieve the BOE’s 2% price target.

Market reaction

The above report is likely to render pound-negative, which could drag GBP/USD back below 1.2400 at the weekly opening. The focus remains on the UK-EU post-transition Brexit trade talks in the week ahead.