Policy validation stems from removing the price expectations driver
Forward guidance was never going to be uniform across the distinct policy constructs of individual central banks, and the BoE’s latest innovation has (perhaps intentionally) made the framework harder to track. GBP’s jump has led to credibility questions, but with the benefit of being temporarily agnostic on currency levels, the dynamics of currency drivers may provide some more comfort in the search for policy optimality.
Read the full report: UBS