British Pound (GBP) Outlook: GBP/AUD, GBP/NZD, GBP/JPY Weakening
GBP price, news and analysis:
- The British Pound is moving lower against the Euro, the Japanese Yen, the Australian Dollar and the New Zealand Dollar after Andy Haldane, the Bank of England’s chief economist, said he was leaving the Bank.
- He is regarded as the most hawkish member of the Bank’s monetary policy committee so his departure could mean less pressure on the Bank to raise interest rates as the UK economy expands and inflation worries rise.
GBP/AUD, GBP/NZD and GBP/JPY weaken, EUR/GBP firmer
Sterling is looking weaker against most other currencies Wednesday after Tuesday’s news that Andy Haldane, the Bank of England’s chief economist, will step down after the Bank’s monetary policy committee meeting in June. He is widely seen as the only hawk on the MPC so his departure could mean marginally easier monetary policy than would otherwise be the case.
GBP is currently gaining against weaker currencies like the US Dollar, the Canadian Dollar and the Swiss Franc but is otherwise lower in early European business Wednesday as traders argue that the Bank is now less likely to increase interest rates for fear of inflation rising as the UK economy recovers from its current weakness caused by Covid-19 lockdowns.
GBP/AUD, for example, is now sitting on the support line of an upward-sloping channel and if that support breaks then further declines will likely follow.
GBP/AUD Price Chart, Daily Timeframe (November 2, 2020 – April 14, 2021)
Source: IG (You can click on it for a larger image)
Note, however, that fellow rate setter Gertjan Vlieghe is due to leave the MPC at the end of August and Vlieghe is seen as more as a dove. His departure will therefore restore the dove/hawk balance on the MPC although that could change again depending on who is picked to replace the two departing members.
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.