The move in the Pound highlights the markets elevated sensitivity to fluctuations in the stance from central banks (RBNZ another instance ). By doing this, while Vlieghe is departing the BoE at the end of August, the simple fact that he is typically more dovish relative to other MPC members might provide a sense of where the rest of the member’s stance lies. Nevertheless, money markets are fully pricing in a move to 0.25percent by Nov 22, an additional hawkish repricing may observe that change towards Q3 2022.
Looking forward to next week, BoE Governor Bailey will be talking on Tuesday and Thursday at which GBP traders will be paying close attention to any further hawkish signals.
The economic calendar is light on the UK side, therefore much of the focus will be on the plethora of tier 1 releases across the Atlantic, most notably the US NFP report. As such, the USD will likely dictate a lot of the price activity in GBP/USD. In turn, with the UK PM sounding careful over the lifting of all Covid restrictions planned for June 21st, dangers that the UK might want to wait could be a headwind for your currency.
