29 May 2014
Stronger pound for longer? – BTMU
FXStreet (Edinburgh) - Currency Analyst Lee Hardman at BTMU, assessed that the BoE might raise rates sooner rather than later, adding further support to the GBP.
Key Quotes
“The pound has lost some upward momentum in the near-term with GBP/USD falling back towards 1.6700 over the last week. Investor expectations of a slowdown in the UK housing market in the near-term resulting from a tightening of mortgage availability is likely contributing in part to the loss of upward momentum”.
“Mortgage approvals have fallen back modestly in recent months although still remain well below their pre-financial crisis levels”.
“The BoE is expected to implement further measures to dampen the housing market in June. However, comments from BoE member Weale have helped to provide support for the pound”.
“In an interview with the FT, Martin Weale stated that the BoE needs to start raising rates sooner rather than later if it wants to avoid painful increases in the future. He thought even a “gradual” rise in interest rates could see rates rising by around 1.0 percentage point a year, although he thought that BoE can “wait a bit longer” before deciding to raise rates”.
“The comments reinforce our view that the BoE will be the first major central bank to begin raising rates which will continue to encourage a stronger pound”.
Key Quotes
“The pound has lost some upward momentum in the near-term with GBP/USD falling back towards 1.6700 over the last week. Investor expectations of a slowdown in the UK housing market in the near-term resulting from a tightening of mortgage availability is likely contributing in part to the loss of upward momentum”.
“Mortgage approvals have fallen back modestly in recent months although still remain well below their pre-financial crisis levels”.
“The BoE is expected to implement further measures to dampen the housing market in June. However, comments from BoE member Weale have helped to provide support for the pound”.
“In an interview with the FT, Martin Weale stated that the BoE needs to start raising rates sooner rather than later if it wants to avoid painful increases in the future. He thought even a “gradual” rise in interest rates could see rates rising by around 1.0 percentage point a year, although he thought that BoE can “wait a bit longer” before deciding to raise rates”.
“The comments reinforce our view that the BoE will be the first major central bank to begin raising rates which will continue to encourage a stronger pound”.