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13 Sep 2013
Flash: GBP/USD subject to the market’s war on BoE - BMO
FXstreet.com (London) - Stephen Gallo, European Head of FX Strategy said the BoE has been doing “its best” to keep rates anchored and the GBP weak.
Key Quotes:
“Admittedly, there is a small element of truth in the idea that financial market participants have “gone to war” with the Bank of England: the risk or probability of there being too much stimulus already in the system for the “knock-outs” to not be hit sooner than the Bank anticipates is certainly not “zero””.
“Still, a lot of what the media have done with the idea that someone has drawn a “battle line” between market participants and the Bank is based purely on “hype”. What is rather likely is that what many believe is an ensuing war between markets and the BoE is nothing more than a failure of the market to “price in” the existence of a new macroprudential toolkit into the curve and the GBP”.
“The BoE no longer has to resort purely to interest rate hikes in order to affect the way in which the financial sector interacts with the real economy; and the Bank has been telling us this over, and over, and over, and over again”.
Key Quotes:
“Admittedly, there is a small element of truth in the idea that financial market participants have “gone to war” with the Bank of England: the risk or probability of there being too much stimulus already in the system for the “knock-outs” to not be hit sooner than the Bank anticipates is certainly not “zero””.
“Still, a lot of what the media have done with the idea that someone has drawn a “battle line” between market participants and the Bank is based purely on “hype”. What is rather likely is that what many believe is an ensuing war between markets and the BoE is nothing more than a failure of the market to “price in” the existence of a new macroprudential toolkit into the curve and the GBP”.
“The BoE no longer has to resort purely to interest rate hikes in order to affect the way in which the financial sector interacts with the real economy; and the Bank has been telling us this over, and over, and over, and over again”.