How Much GBP Weakness Can BoE Stomach?

The pound’s latest Brexit-fueled decline may be getting serious enough to command Mark Carney’s attention once again.Sterling’s weakening to the lowest since October 2016 in trade-weighted terms has brought the currency near the level that prompted the Bank of England governor to point out at the time that he and his colleagues weren’t “indifferent” to the exchange rate. That suggests any remarks from policy makers will now be scrutinized all the more for any reference to their thinking on its impact.

While most BOE officials have indicated they are willing to look through the initial inflationary impact of the pound’s depreciation since the EU referendum, another sustained decline may test their tolerance. Against the euro, the pound is near the weakest since 2009.

Source: Brexit-Driven Pound Drop Tests How ‘Indifferent’ Carney Can Be – Bloomberg

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.