BOE Bailey is back on the wires saying:
- Disinflation is proceeding slowly.
- Labour market is weakening gradually.
- Markets are pricing and potential interest rate increases
- While a low hire rate, economy is contributing to unemployment
The BOE Rate unchanged today with a vote of 6-3.
In his press conference, Bank of England Governor Andrew Bailey struck a cautious tone after the BoE left interest rates unchanged. While he acknowledged that higher energy prices could eventually create inflationary “second-round effects,” he emphasized there is little evidence that those pressures have become embedded in wages or broader pricing so far.
Bailey said the UK economy remains subdued, the labor market is softening, domestic inflation pressures are easing, and weak demand is limiting companies’ ability to pass on higher costs. Although the Bank remains prepared to adjust policy if the outlook worsens—particularly if Middle East-related energy shocks become more persistent—he stressed that this is not the Bank’s base case.
The clearest message came late in the press conference when Bailey explicitly pushed back against market speculation of a rate hike, telling investors not to leave thinking the BoE is moving toward tighter policy and adding that policymakers are “not talking about an insurance hike.” He also noted that current market pricing reflects risk premia rather than the Bank’s central expectations and that the market’s base case remains for rates to stay on hold.
The GBPUSD is following the USD lower help by getting back above its 100 and 200 day moving averages at 1.3395. That is a risks defining level not only today but going forward. Staying above is more bullish. Moving below would disappoint the buyers and tilt the bias more to the downside.
Recall, the price fell below those moving average is back on July 21, and stay below. Today after initial break failed, the price regathered and pushed to the upside help by the overall dollars selling. The high price has extended to the swing high from July 21 at 1.34557. A move above that level with next target 1.34797 which were the high prices from July 17 and July 20 respectively.
This article was written by Greg Michalowski at investinglive.com.