(27 JUNE 2019)DAILY MARKET BRIEF 1:GBP ignores accommodative monetary policy
A week has passed since the Bank of England confirmed that it was prepared to keep its bank rate unchanged and that it continues to support a hawkish bias. This along with Fed dovish tone gave GBP/USD a boost as it recovered from lows along with Gilt yield across all maturities. Yet Boris Johnson hard Brexit stance, BoE dovish turn still remain discounted on the foreign exchange market.
The comment on the commitment to “do or die” made by Boris Johnson concerning the European Union 31 October deadline before the last round of elections for the position of British Prime Minister starting on the week beginning 22 July 2019 is not particularly good news for GBP bulls. Furthermore, BoE Governor Mark Carney testimony in front of UK Parliament Treasury Committee is quite revealing as his statement that “some stimulus” (i.e. rate cut) could be deployed if headwinds hurt the economy amid a no-deal Brexit confirms a GBP-bearish bias looking forward.
GBP/USD has been bouncing from 1.2534 (17/06/2019 low), a 6-month low and is currently trading sideways ahead of US May PCE data released on Friday as well as G20 summit.
