Bank of England

The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe.

As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government.

Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy.

Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment systems.

The bank helps not only craft monetary and financial stability within the UK but also yields enormous influence on the country’s currency, the British pound.

How does the Bank of England (BoE) Affect Forex Traders?

The BoE is one of the closest watched central banks by forex traders, along with the US Federal Reserve and European Central Bank (ECB).

FX traders are regularly tuned into any updates out of the central bank given its potential to affect the pound and many other currency pairs.

The Euro for example is highly correlated to the pound. Furthermore, the bank also has at its disposal a variety of monetary policy tools that are capable of impacting the pound.

One of the most common of these historically has been quantitative easing (QE), among others, which can increase or decrease the value of the pound.

Beyond FX, the BoE helps address domestic inflation, tinkering interest rates to stimulate the economy.

Many investors are cognizant of the BoE interest rate as this measure is instrumental for a variety of economic barometers.