Adam Posen, which was a consistent hawk, doesn’t support additional QE in Britain anymore. Only one member, David Miles, still supports a further expansion.
No more pound printing means a strong pound. This surprise sent GBP/USD towards the critical round level of 1.60 which it had a hard time breaking twice in the past week. Will it make it this time?
Miles wanted an expansion from 325 to 350 billion pounds. Nobody called for a rate hike at this point, but such calls might come as early as the next meeting. Tucker already hinted that inflation is too high and should be tackled.
GBP USD Attempt on 1.60 as QE Fades Out – Click image to enlarge
GBP/USD currently trades at 1.5975, falling from a peak of 1.5993. A break above 1.60 will pave the road to 1.6060. A drop will find the pair at support down at 1.5910.
For more on the pound, see the GBP/USD forecast.
In addition, employment figures were marginally better than expected. Claimant Count Change rose by only 3.6K, less than 6.6K that was expected. Also last month’s rise in jobless claims was revised to the downside, only 4.5K.
The unemployment rate for February dropped unexpectedly from 8.4% to 8.3%, with Average Earnings Index being the only minor disappointment (from a minor figure) rising only 1.1%.
Yesterday, Britain reported that inflation fell once again: from the trough of 3.4% in headline CPI to 3.5%. The refusal of inflation to return into the 1-3% target causes headaches for some of the hawkish central bankers, and pushes the big dove Posen towards their camp.
