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MT4.MT5 Trend Analysis: Good for GBP!

发布时间：2022-08-25 浏览：115

On July 19, Bank of England Governor Bailey confirmed that a 50 basis point rate hike is indeed possible in August. Bailey said that while a 50-basis-point hike is likely, it's not a foregone conclusion.

 

 

 

The remarks will support current market expectations for a rate hike by the Bank of England and could help support the pound. In fact, the pound has now recovered earlier losses against the euro and extended its gains against the dollar.

 

Previously, the Bank of England has raised interest rates five times in a row, from 0.1% in December last year to the current 1.25%.

 

On June 16, the Bank of England raised interest rates by 25 basis points to 1.25%, following the Fed's 75 basis points increase. The key rate of 1.25% is also the highest since January 2009, when the UK economy was hit by the global financial crisis.

 

Bailey also said that the Bank of England may reduce its holdings of British government bonds, that is, to start quantitative tightening, and will announce detailed related plans at the interest rate meeting on August 4. Bailey said the Bank of England will have a comprehensive plan to stick to its quantitative easing holdings, which were reduced by between 50 billion and 100 billion pounds in the first year of quantitative tightening. Top BoE officials will begin reducing their holdings of these government bonds after a confirmation vote in September.

 

After the Federal Reserve raised interest rates by 75 basis points last month, major central banks around the world are considering larger rate hikes, including the Bank of England. In addition to raising interest rates, another way for the Bank of England to curb inflation is quantitative tightening. The decision on Aug. 4 will include the Bank of England's plan to shrink its balance sheet, known as quantitative tightening. Bailey will say this will ensure that sales plans can begin after a "confirmation vote" that could take place as early as September.