Followed by growth at the beginning of the week on a background of stronger than expected GDP data, the pound has stabilized, by itself, and against the euro. Now the focus goes meeting the Fed, the ECB and the Bank of England next week, which will discuss future policy. GDP data have created a space for doubt about the likelihood of the start of quantitative easing next week, which even before the data was seen as a risk, not the likely scenario. Nevertheless, some additional stimulating activity is still possible in the context of the next few months, not least because of the degree of fiscal tightening, which will "bite" in the coming months and quarters. And do not forget that interest rates are still at 0.50%, so that the Bank of England still has room to reduce interest rates, and changes in the way that banks reimburse the reserves of the Bank of England, that is, rather, to encourage more loans from reserves rather than their "slack" in the CB and inaction.
Translate this page
