Gbp/usd
Another day, another positive PMI figure in Britain. Yesterday, the services PMI figure jumped to its highest level in 8 months, dragging Sterling over 1.62 on the Dollar and 1.18 versus the Euro before an afternoon of profit taking put an end to the rally. Again, the data points to an upward revision of the previous quarters GDP and along with the current Bank of England offensive on inflation expectations, suggest that the BoE at least wants us the begin to think about rising interest rates again, even if actual increases remain in the distant future. The severe economic headwinds of the government cuts about to hit Britain will constrain any potential rates rises, so the Bank is aiming to shift our expectations onto future rises, keeping our expectations of future inflation anchored and enabling them to keep rates low for a prolonged period.
Another day, another positive PMI figure in Britain. Yesterday, the services PMI figure jumped to its highest level in 8 months, dragging Sterling over 1.62 on the Dollar and 1.18 versus the Euro before an afternoon of profit taking put an end to the rally. Again, the data points to an upward revision of the previous quarters GDP and along with the current Bank of England offensive on inflation expectations, suggest that the BoE at least wants us the begin to think about rising interest rates again, even if actual increases remain in the distant future. The severe economic headwinds of the government cuts about to hit Britain will constrain any potential rates rises, so the Bank is aiming to shift our expectations onto future rises, keeping our expectations of future inflation anchored and enabling them to keep rates low for a prolonged period.