BoE's Broadbent: It takes time to understand the forces driving the economy

Eren Sengezer FXStreet

In a speech given at the London Business School on Monday, Bank of England (BoE) Deputy Governor Ben Broadbent explained that policymakers will have to be patient to see a steady decline in wage inflation.

"It takes time to understand the forces driving the economy, particularly if one’s having to rely on nominal variables like services inflation and wage growth, things that would normally be seen as late-cycle indicators. The same goes for uncertainty relating to the accuracy of the observable variables themselves," Broadbent said and continued:

"Given the volatility in the official estimates, and the disparity (such as it is) among the various indicators we have, it will probably require a more protracted and clearer decline in these series before the MPC can safely conclude that things are on a firmly downward trend."

Market reaction

GBP/USD showed no immediate reaction to these comments and the pair was last seen trading virtually unchanged on the day at around 1.2670.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows.

Gold bounces off lows, back above $5,100

Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.