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GBPUSD Pops Higher, BoE Says Credit to UK Households Set to Fall

GBPUSD Pops Higher, BoE Says Credit to UK Households Set to Fall

2017-07-13 09:27:00
Martin Essex, MSTA, Analyst
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Talking Points

- GBPUSD has popped higher out of a rising channel in place since the beginning of this month.

- In its Credit Conditions Survey, the Bank of England says lending to households will likely fall back.

- Want to know where GBP could be heading? Check out our brand new Trading Guides: they’re free and have just been updated for the third quarter of 2017

GBPUSD has broken out to the upside from a falling channel but will need to stay above the channel resistance line to confirm that further strength could be on the way. Moreover, the pair eased a tad after the latest Bank of England Credit Conditions Survey forecast a drop in credit to UK households.

Chart: GBPUSD 30-Minute Timeframe (Month to Date)

GBPUSD Pops Higher, BoE Says Credit to UK Households Set to Fall

Chart by IG

In its survey, the central bank said the availability of secured credit to households was reported to have increased in the three months to mid-June 2017, driven by lenders’ market share objectives. But lenders expect availability to fall slightly over the next three months to mid-September, reflecting a changing appetite for risk.

Lenders also reported that the availability of unsecured credit to households had decreased in Q2, it added, and expected a further decrease in Q3. A changing appetite for risk was reported to be an important driver of this in Q2 and Q3, with a changing economic outlook also affecting expectations for Q3.

Earlier, the Pound was boosted by comments from a member of the BoE’s monetary policy committee in The Times newspaper. Ian McCafferty, one of the three rate-setters who voted for an increase last month, said the BoE should consider unwinding its £435 billion quantitative easing programme earlier than planned.

McCafferty added that the Bank ought to review its policy of leaving QE unchanged until interest rates are close to 2% and said he was minded to vote for a quarter-point rate rise again next month in a sign that the MPC will remain divided.

His comments came as the UK government prepares to introduce its Repeal Bill to Parliament today and followed news that UK house-price growth cooled in June as the inconclusive election weighed on demand, according to the Royal Institution of Chartered Surveyors.

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

Interested in learning more about trading the markets? Check out our Forex Educational section.

You can find other articles by Martin here.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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