The Pound is falling deeper. Overview for 17.10.2017

The GBP/USD pair is trading under pressure on Tuesday in response to the statistics and the comments made by the BoE Governor.

On Tuesday afternoon, the British Pound continues retreating against the USD. the current quote for the instrument is 1.3187.

Today’s statistics showed that the Inflation Rate in the United Kingdom increased up to 3% y/y in September (the same as expected) after being 2.9% y/y the month before. The Core Inflation Rate remained at 2.7% y/y.

The Bank of England has already called the inflation numbers and the overall economic situation a “turning point”. Evidently, the increased inflation may stimulate the British regulator to increase the key rate the next month, for the first time in more than 10 years.

The BoE Governor, Mark Carney, who spoke earlier today, said that the key rate might really be increased in the next several months. His colleague, Silvana Tenreyro, who spoke a bit later, paid attention to noticed that it was necessary to change monetary policy due to the lower economic activity. In her opinion, in the past the precautionary approach was justified, but that time had passed and the country needed to “close some of the QE programs”. 

It’s not the first day investors have been discussing that the Bank of England now has to follow its own instructions, because by making pauses in the rate increase, the regulator is risking to lose investors’ trust completely. It appears that the regulator has played itself into a corner and now has to find the way out to ensure its reputation.

RoboForex Analytical Department