GBP currency neutral outlook - BBH

By FXstreet.com | June 26, 2014 AAA

FXStreet (Guatemala) - In relation to the recent review on rates and the financial stability report from the BoE and the FPC, Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman explained while sterling is reacting positively to the news, they believe that macro-prudential measures targeting the housing sector should be seen as currency-neutral.



Key Quotes



"While sterling is reacting positively to the news, we believe that macro-prudential measures targeting the housing sector should be seen as currency-neutral. In many cases, such measures are taken in lieu of rate hikes since that blunt instrument has much wider-reaching implications for the economy."



"Indeed, BOE Governor Carney said after the measures were announced that the FPC’s actions should help ensure a “gradual” tightening cycle. He added that the impact of these FPC measures will be assessed at the July MPC meeting, and that it has a broad range of additional tools at hand. Cable has popped back above the $1.70 level, while EUR/GBP has moved back below .8000."



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