The Bank of England Chief Economist Andy Haldane held a positive and optimistic tone on Thursday regarding the UK economy. Haldane asserted that the UK economy may be near pre-pandemic output levels. This recent statement and last weeks remarks about “turning off the stimulus tap” are now creating momentum amongst market participants of hawkish rhetoric to be expected from the BoE at the MPC meeting next Thursday – similar to the hawkish tone from the Fed on Wednesday.
The market didn’t quite react to the comments from Haldane, but does firmly put the Super Thursday meeting in focus for GBPUSD to reclaim the 1.40 range, if not higher.
A similar contractionary monetary policy tone was struck by the ECB’s Governing Council member Jens Weidmann, whereby he called for the ECB to end its Pandemic Emergency Purchase Programme (PEPP). Weidmann also mentioned that German inflation is also temporary, much like the stance taken by his British and American counterparts. These comments are very much in line with both the BoE and FED, and signal a wider consensus by central banks to begin tapering historically lose monetary policies, which were introduced to support economies in the wake of the global pandemic.
Have a great weekend.
Author: Joshua Nagenthiran, Senior Relationship Manager
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