BY Yasin Ebrahim
Investing.com – The pound rose against the U.S. dollar on Wednesday and continued to maintain its third consecutive week of gains against the U.S. dollar. Before the Bank of England meeting on Thursday, weak economic data exceeded expectations.
As the center of the British economy, last month’s reading rose to 56.5 from 47.1 in June, although it did not meet economists’ expectations of 56.6. Data show that the UK’s economic recovery accelerated in July, but it was partly due to pent-up demand, which is about to fade. Pantheon’s Macroeconomics Department stated that with the arrival of economic headwinds, the country will lay off employees and increase savings.
The pound’s rise came the day before the Bank of England meeting.
The Bank of England is expected to maintain interest rates unchanged, but will forecast a series of economic measures including inflation, GDP and unemployment. Investors have been discussing when the Bank of England will lower interest rates below zero in recent weeks, but Thursday’s meeting is unlikely to provide detailed insights. Scotia Economics said: “The forecast will be updated and may show MPC’s bias against downside risks.” “The negative interest rate plan is expected to be further severely cracked, but the results of the Bank of England’s review of the plan are unlikely to be disclosed. At present, the market is in progress. Pricing starts at the beginning of 2021 with a marginal negative policy rate.” ABN AMRO ING agreed.
ING said: “The Bank of England is “actively reviewing” the “negative interest rate policy”, but we think it is too early for the Bank of England to take any decisive action here.” “We think the Bank of England will rather postpone the use of NIRP until 2021. Until the relationship between the United Kingdom and the European Union becomes clearer.”