GBP: Our Bold Call For BoE Introducing Negative Rates On Feb-4 Now In Doubt – MUFG

0

What is the outlook for BoE policy and for the British pound in the near-term?

Here is their view, courtesy of eFXdata:

MUFG Research discusses its outlook for the BoE policy trajectory.

“Comments reported by Reuters from BoE Governor Bailey suggest the prospect of negative rates in the UK remains finely balanced…BoE Deputy Governor Broadbent also spoke yesterday and echoed Bailey’s sentiments on the economy stating the economy could be stronger than suggested by some of the data given the unprecedented nature of the pandemic may not be capturing the true extent of shifts in consumer demand,” MUFG notes.

We went with the bold call of a rate cut into negative territory at the next MPC meeting on 4th February. The comments yesterday certainly put such a move so early in the year in doubt. We certainly must give greater weight to these comments than Tenreyro’s on Monday. Reduced market pricing will provide some support for GBP. The increased pace of COVID vaccinations may also provide support short-term and hence the near-term outlook for GBP looks to be improving,” MUFG adds.

For lots more FX trades from major banks, sign up to eFXplus

By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.