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Aug 06 - 06:55 AM

GBP/USD - COMMENT-BoE's Lack Of Negative Is Positive For Sterling

By Rob Howard  —  Aug 06 - 04:40 AM

Sterling is benefiting after the Bank of England poured cold water on doves hoping that the central bank might experiment with negative interest rates.

On Thursday, the BoE said negative rates might be less effective now as a tool to stimulate the economy, although "it will continue to review the appropriateness of a negative policy rate as a policy tool" nL8N2F81TQ

Negative BoE rates would hurt sterling -- so anything that appears to lessen the risk of that happening helps GBP.
This was reflected by the pound's rise to a five-month high against the U.S. dollar, 1.3184, after the BoE's monetary policy announcement.

The rise to 1.3184 comes after July saw the pound rack up its biggest monthly gain against the U.S. dollar, 5.5%, since May 2009.
Friday's CFTC data is expected to show that IMM speculators reduced their net GBP short position from an eight-week peak in the week to August 4.

Related comment: nL1N2F507X

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Source:
Refinitiv IFR Research/Market Commentary

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