GBP/USD: Sterling needs Bailey triggering QE bazooka to thrive
|GBP/USD has been calm,trading around 1.2530, ahead of the Bank of England meeting as the BoE is set to expand its bond-buying scheme by around £100 billion. A larger sum would boost the pound while less than £100 billion is set to send the cable lower, FXStreet’s analyst Yohay Elam briefs.
Key quotes
“Bailey's previous expansion of the QE program to its current £645 billion enabled the government to support workers and provide another stimulus in times of trouble and thus supporting the economy. In Thursday's decision, a higher sum would send sterling higher while a sub £100 billion would weigh on the pound.”
“The BoE is likely to leave rates unchanged at 0.10%, but laying the ground for going further down would hurt sterling. That may come via a vote of one or more of the Monetary Policy Committee's members in such a direction. The probability is low but the impact could be significant.”
“Sterling has been struggling with Brexit uncertainty, and recent developments have been somewhat worrying. While European Commission President Ursula von der Leyen may be ready to offer concessions on fisheries, Germany has reportedly lowered expectations for any progress during the summer.”
“The UK is preparing a ‘shock and awe’ campaign to prepare for Brexit, a headline that has raised eyebrows. It also triggered concerns for a no-trade-deal outcome to the current transition period which expires at year-end.”
“The US dollar has somewhat advanced amid rising coronavirus hospitalizations and cases in several US southern states such as Texas and Florida. The outbreak in Beijing – which resulted in substantial limits to transport – also worries investors.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.