Bank of England Is Assessing Negative Rate Policy

May 25th from WikiFX News. Bank of England Governor Andrew Bailey change his comment last week that negative rate “is not an approach we‘re considering or planning to take” and said it’s the right time to review and assess all policy tools, indicating that the Bank of England is urgently evaluating the possibility of introducing negative rate.

Giving the green light to negative rate doesnt mean the central bank will immediately adopt a rate below zero. What the central bank is doing right now is planning for the next step after a potential shock in the future, and the pandemic accelerated the process. Currently the central bank is relying on QE as the main stimulus approach, the government has a rising demand for borrowing, and a risk of further shrinking economy also confirms the need for easing policies.

With the government launching unprecedented measures to prevent possible economic breakdown due to the pandemic, Britain‘s budget deficit in April climbed to an unprecedented high since the modern record was established in 1993, with central government spending surging 57% and income falling 27%. Even during the financial crisis, Britain’s monthly borrowing had never exceeded 22 billion pounds.

GBP/ USD daily pivot points 1.2176-1.2196

S1: 1.2140 R1:1.2212

S2: 1.2114 R2:1.2258