BOEs Catherine Mann
BOE MPC member Catherine Mann is speaking. . She says:
- income data suggest increasingly stark trade-off in terms of rising and persistent inflation vs. deteriorating real income
- UK's exposure and the sensitivity to global spillover could exasperate the inflation activity trade-off
- incoming data on inflation show increasing domestic embeddedness, persistence and momentum
- countervailing factors importantly and increasingly are likely to support consumption spending in the near term
- a robust policy move would reduce risk that domestic inflation already embedded is further boosted by inflation imported via a sterling depreciation
- domestic conjunctural situation is characterized by very high inflation
- if the Fed tightens at the currently expected pace, and ECB musters an increase soon, the scenarios outlined above suggest additional depreciation pressure on sterling
- given the likely double-digit inflation, being mindful of the near term implications of the global factors for inflation is particularly relevant
- a 50 basis point move reduces risk of domestic inflation being boosted by weaker sterling
- I open the door to a policy rate reversal in the medium-term when the domestic supports to demand fade and when weakness in external sources of demand bite
- For the UK data shows that a US tightening has been inflationary rather than disinflationary
- it is important to react in a timely fashion to a US monetary policy shock that causes the UK price level to jump
At the recent June meeting last week, MPC members Mann, Jonathan Haskel and Michael Saunders voted for a larger 50 basis-point increase.
The GBPUSD has risen modestly in trading today but found resistance against its 200 hour moving average currently at 1.2277 the current price is trading at 1.2236.
Looking at the hourly chart, that is just above the 38.2% retracement 1.2213. Low that and the 100 hour moving average 1.21729 would be targeted. That is near the low price from Friday's trade.
GBPUSD trade between its 200 and 100 hour moving averages