Ian McCafferty is a consistent hawk in the Bank of England’s Monetary Policy Committee. While his colleagues are deliberating the options of raising rates against rising inflation yet a slowing economy, McCafferty has other ideas.
In an interview with The Times, he suggested reviewing the Bank’s policy of Quantitative Easing. He suggests bringing an early end to the bond-buying scheme. This is a hawkish shift.
Also the Federal Reserve is on a path to begin unwinding its QE program, probably in September, beginning the reduction of its balance sheet. However, Fed Chair Janet Yellen expressed some concerns over inflation, opening the door for a delay regarding the next rate hike.
Yellen will testify again today, but she is unlikely to provide any new headlines.
Elliott Wave Analysis: GBPUSD Trading in A Bigger Ending Diagonal
GBP/USD rises, but there are many doubts
On this background, GBP/USD is on the rise. GBP/UDS trades above 1.29 once again, reaching 1.2924. Resistance awaits at 1.30, followed by 1.3050. Support is at 1.2820 and then at 1.2775.
Sterling got a boost from the not-too-bad jobs report yesterday, but there are still reasons to worry. Wages are rising at a slower pace than inflation and consumers remain hesitant.
The RICS House Price Balance came out at 7% against 15% expected. The BCC’s survey showed weakness. We will later get the Bank of England’s Credit Conditions survey.
Here is the chart:
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