As mentioned earlier in the week, Central bank speakers are dominating the data points this week. We have finally seen some movement on the back of one of the speakers from the Bank of England. Sterling has fallen by around 0.4% this morning after comments from MPC member Michael Saunders. Let’s look at what he said and why it has affected the pound.
Mr Saunders was speaking this morning to local businesses in England and touched on the topic of the moment, Brexit. He said that the Bank of England may still have to have a negative stance on the base interest rate going forward even if the UK does agree a deal with the EU.
“If the UK avoids a no-deal Brexit, monetary policy also could go either way and I think it is quite plausible that the next move in Bank Rate would be down rather than up,” Mr Saunders had been seen as the most hawkish member of the board and an influential figure so his change in stance had been viewed by same as a big change in his stance.
With this news seen as a negative for the UK economy going forward and a potential limit on investors money in the UK, the Pound dropped in the early trading hours of Friday. The move wasn’t huge and stabilised after the board members comments with GBP/EUR sitting at €1.1257 and GBP/USD at $1.2382 at the time of writing.