Fed Lessons for BoE
Friday’s UK GDP release might not have the same impact as other activity data but at the very least, markets would not be surprised if the print registered an upside surprise. From jobs figures to PMIs, this has consistently been the case and the BoE is now struggling with the effectiveness of its guidance. Then again, as our economists note, the MPC itself is showing a spectrum of views on the potency of forward guidance so why should markets give the benefit of the doubt? The problem is the status quo may drive the pound to troubling levels. To reverse the trend, the BoE may need to learn a thing or two about threshold discretion from the Fed.
Read the full report: UBS