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GBPUSD: BoE’s less perturbed - BBH

FXStreet (Delhi) – Research Team at BBH, note that BoE’s financial policy committee meeting is unlikely to impact sterling or the UK debt market but unlike the Federal Reserve which seems distraught over the turbulence in China, the Bank of England seems less perturbed.

Key Quotes

“This contrast does not mean the Bank of England is more likely to hike interest rates before the Federal Reserve. Nor does this imply that the BOE is waiting on the Fed to act first, to test the waters, so to speak. It is that they are responding to essentially the same macroeconomic considerations, like low inflation and weak global demand.”

“On one hand, the UK appears to be experiencing greater wage pressure than is evident in the US. On the other hand, the UK economy is also more sensitive to an increase in interest rates than the US.”

“The highly development mortgage market in the US means that most homeowners have locked in low interest rates, which are not sensitive to a rise in interest rates. Homeowners in the UK typically have variable rate mortgages that respond quickly to increases in the base rate.”

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