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Bank of England policymaker Michael Saunders noted on Friday that he is not “theologically opposed” to negative interest rates and noted that they haven’t yet finished the review on them.

“Negative rates review will look at indirect effects on banks and lending,” Saunders further added. “The UK banking system has a high share of deposits so negative rates might produce more of a squeeze on margins for banks.”

Regarding the UK labour market, “the likelihood is that unemployment will rise very sharply in the next few quarters,” Saunders noted.

Market reaction

The GBP/USD pair showed little to no reaction to these remarks and was last seen gaining 0.1% on the day at 1.3293.

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