Tag Archives: Sterling exchange rate

While recent data has been encouraging, we still expect the UK economy to weaken in 2017. Short-term support for sterling may be undermined by Brexit talks and twin deficits. At its 15 September meeting, the Bank of England (BoE) left its main policy rate unchanged at 0.25% and maintained its Asset Purchase Facility (APF) target at GBP435 bn. The BoE’s assessment of economic conditions was broadly similar to its August projections despite some “slight upside” in the data. Nevertheless, the...

Sterling quickly steadied after a lurch downward following the latest Bank of England (BoE) policy easing. But looming Brexit negotiations and the UK’s twin deficits cast a shadow over the currency On 4 August, the BoE delivered a broad easing package that beat market expectations. Furthermore, the BoE hinted at an additional rate cut later in the year (our scenario is for another 15bp rate cut in Q4 2016). The easing package delivered by the BoE was a more aggressive response to Brexit...