Breaking News
Investing Pro 0
Free Webinar - Decode the market's secrets! | Tuesday, May 30, 2023 | 01:00PM EDT Enroll Now

Dollar Weakens Amid Confusion on Bank of England Stance

Published Oct 12, 2022 03:04AM ET Updated Oct 12, 2022 03:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters

By Geoffrey Smith -- The dollar weakened in early trade on Wednesday in Europe, amid confusion over the Bank of England's willingness to carry on supporting a U.K. bond market that has emerged as a key pressure point in the global financial sector. 

By 03:30 ET (07:30 GMT), the dollar index, which tracks the greenback against a basket of six advanced economy currencies, was down 0.1% at 113.15, edging lower as some traders bet on the Bank of England being forced to extend its outright bond purchases past its self-imposed deadline of Friday. 

Bank of England Governor Andrew Bailey had said on Tuesday - with unusual candor - that pension funds had three days to sort out their current positions, sending the pound sharply lower. However, it recovered most of its losses after the Financial Times reported that Bank officials had privately briefed City bankers that it may after all extend that deadline

The confusion left GBP/USD at $1.1021, up half a percent from late Tuesday in the U.S., but with the market on a knife-edge as it awaits more clarity.

Data showing that the U.K. economy shrank in August hardly helped the mood, with developments in manufacturing, services and construction all worse than expected during the month.

"What we are seeing in real time in the U.K. is a decades-long hyper-financialization of the economy being partly unwound on fast-forward at gunpoint; and/or a trigger for a multi-decade market hyper-crash on fast-forward; or both," said Michael Every, global macro-strategist with Rabobank in a note to clients. He warned that there was "more to boot if you extend your view wider."

Simon French, chief economist with Panmure Gordon, tweeted that Bailey's comments did nothing more, in essence, than repeat the Bank's press release from a day earlier. That had set out a switch from outright purchases of Gilts to lending operations that have a more manageable impact on the money supply, and consequently on inflation. 

Elsewhere, the EUR/USD struggled to make headway, edging up 0.1% to $0.9712 after Bank of France Governor Francois Villeroy de Galhau appeared to leave some room for doubt about the European Central Bank's ability to keep up with the pace of U.S. interest rate hikes

Villeroy said it was too early to say whether the ECB should raise its key rates by 50 or 75 basis points when it meets on October 27th, a week before the Federal Reserve's next meeting. Villeroy also said the bank's refinancing rate should be at its neutral level -- or "a bit less than 2%" -- before the end of the year, which would allow ECB room to shrink its balance sheet.

Also overnight, the Korean won strengthened after the Bank of Korea raised its key rate by 50 basis points to 3.0% as expected, and warned of more hikes to come. It explicitly singled out the won's weakness as having been a contributing factor to inflation running above its target. 

Dollar Weakens Amid Confusion on Bank of England Stance

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email