Mr Evans said: “You could take the view, as I have, that inflation alone would call for more accommodation than we put in place with just our last [monetary policy] meeting.” “As long as inflation continues to behave the way that it has, I think we have capacity to pursue these accommodative stances in support of the economy and sustaining the expansion and maximum employment.” Meanwhile, signs of a strengthening Chinese economy have alleviated some concerns about the impact of the US-China trade dispute.
This comes following data showing China’s trade exports increased by 3.3 percent in July, heightening risk-appetite and prompting traders to flee the US dollar safe-haven in favour of riskier assets.
The pound gained on the US dollar despite today’s publication of the RICS Housing Price Balance figures for July, which fell below forecast from -1% to -9%.
Simon Rubinsohn, a Chief Economist at RICS, commented: “The forward-looking metrics on prices and sales also seem to be losing momentum as concerns, clearly voiced in the anecdotal feedback – both about Brexit and political uncertainty – heighten.”
However, Brexit developments remain in focus with fears that Prime Minister Boris Johnson’s controversial advisor, Dominic Cummings, could push to prorogue Parliament and force through an October 31 Brexit – deal or no deal.
UK party political tensions are also on the rise, with Liberal Democrat MP Chuka Umunna saying that all no-deal Brexit fears could “all come to nothing” if Labour MPs and Tory MPs persist in voting in favour of legally binding measures to prevent a disorderly exit.
Meanwhile, US dollar traders await today’s release of US jobs data. With any signs of improvement, we could see the ‘greenback’ claw back some of today’s losses.
The GBP/USD exchange rate is likely to become increasingly volatile as Brexit uncertainties increase and UK-EU negotiations continue to show signs of breaking down.