21 Aug 2013
Flash: GBP/USD strength an unexpected outcome? – UBS
FXstreet.com (New York) - Gareth Berry, a Research Analyst at UBS analyzes the effect of the BoE on the GBP/USD.
Key quotes
“In hindsight, the BoE’s fruitless entreaties to markets over the past few weeks have exposed the limitations of zero-bound policy. On many occasions since the financial crisis, there have been calls (especially by the IMF at one point) for central banks to adopt a more liberal approach to inflation mandates.”
“This has been executed in practice, but the onset of forward guidance has complicated proceedings. From investors’ point of view, the biggest point of contention now for guidance in general is the breach of price targets.”
“Should key inflation readings show signs of structural gains, central will struggle to anchor interest rates, with the GBP/USD strength an unwelcome second-order effect.”
Key quotes
“In hindsight, the BoE’s fruitless entreaties to markets over the past few weeks have exposed the limitations of zero-bound policy. On many occasions since the financial crisis, there have been calls (especially by the IMF at one point) for central banks to adopt a more liberal approach to inflation mandates.”
“This has been executed in practice, but the onset of forward guidance has complicated proceedings. From investors’ point of view, the biggest point of contention now for guidance in general is the breach of price targets.”
“Should key inflation readings show signs of structural gains, central will struggle to anchor interest rates, with the GBP/USD strength an unwelcome second-order effect.”