Pound Sterling GBP Holds Firm Despite Bank of England Haldane?s Comments

September 20, 2015 - Written by John Cameron

STORY LINK Pound Sterling GBP Holds Firm Despite Bank of England Haldane?s Comments

Comments this afternoon from the Bank of England’s Chief Economist Andy Haldane threaten to supress support for the Pound Sterling (currency : GBP) as we head into the weekend market close. Haldane used a set piece speech earlier to suggest that the Old Lady of Threadneedle Street could countenance cutting Base Rate to below zero levels in an effort to ward off the creeping threat which deflation poses to the domestic economy. Haldane suggested that the argument for increasing UK interest rates remains, ‘some way from being made’, and went on to assert that, ‘were the downside risks I have discussed to materialise, there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target.’

However, the price action for the Pound Sterling against the other major global tenders since Haldane’s comments suggests that they were not universally considered to be a bad thing for the UK unit. The Pound has broken back above the 1.3700 GBP EUR threshold against the euro (currency : EUR) in the last few minutes and has spent much of today’s session changing hands at above the 1.5600 GBP USD level against the US Dollar (currency : USD). Haldane’s suggestion that Greece’s recent debt woes and the meltdown in China’s equities markets as, ‘the latest leg of what might be called a three-part crisis trilogy’ was taken by most investors as a sign that the global economies period of woe is nearing an end. If this proves to be the case, then UK interest rates may still be on their way Northwards sooner rather than later.

On the data front, this afternoon’s highlight came from Canada in the form of the publication of August’s Consumer Price Index inflation numbers. In the end, the figures came in exactly as per expectations, with a year-on-year showing of 2.1% and a month-on-month print of 1.3%. Investors liked what they saw and the Canadian Dollar (currency : CAD) strengthened as a consequence, sending the GBP CAD exchange rate briefly down into the 2.0300s.

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts