Thursday was Bank of England
Bank of England
The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe. As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government. Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment systems. The bank helps not only craft monetary and financial stability within the UK but also yields enormous influence on the country’s currency, the British pound. How does the Bank of England (BoE) Affect Forex Traders? The BoE is one of the closest watched central banks by forex traders, along with the US Federal Reserve and European Central Bank (ECB). FX traders are regularly tuned into any updates out of the central bank given its potential to affect the pound and many other currency pairs. The Euro for example is highly correlated to the pound. Furthermore, the bank also has at its disposal a variety of monetary policy tools that are capable of impacting the pound. One of the most common of these historically has been quantitative easing (QE), among others, which can increase or decrease the value of the pound. Beyond FX, the BoE helps address domestic inflation, tinkering interest rates to stimulate the economy. Many investors are cognizant of the BoE interest rate as this measure is instrumental for a variety of economic barometers.
The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe. As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government. Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment systems. The bank helps not only craft monetary and financial stability within the UK but also yields enormous influence on the country’s currency, the British pound. How does the Bank of England (BoE) Affect Forex Traders? The BoE is one of the closest watched central banks by forex traders, along with the US Federal Reserve and European Central Bank (ECB). FX traders are regularly tuned into any updates out of the central bank given its potential to affect the pound and many other currency pairs. The Euro for example is highly correlated to the pound. Furthermore, the bank also has at its disposal a variety of monetary policy tools that are capable of impacting the pound. One of the most common of these historically has been quantitative easing (QE), among others, which can increase or decrease the value of the pound. Beyond FX, the BoE helps address domestic inflation, tinkering interest rates to stimulate the economy. Many investors are cognizant of the BoE interest rate as this measure is instrumental for a variety of economic barometers.
Read this Term day:
Coming up later today are more speakers from the BoE:
1100 GMT – BoE’s Hauser speaks at the ECB Conference on Money Markets in London
1215 GMT – BoE’s Pill and Shortall brief on Monetary Policy Report National Agency in London
Andrew Hauser is Executive Director for Markets. He is responsible for:
- managing the BoE balance sheet, including all aspects of the design and execution of our operations in financial markets
- managing the UK’s official foreign exchange
Foreign Exchange
Foreign exchange (forex) represents the practice of exchanging or converting a specific country’s currency into another country’s currency. A popular example includes the conversion of the Australian dollar (AUD) into US dollars (USD), and/or vice versa. There are a variety of mediums this can occur over. In its most basic form, the exchange of currencies can be handled over a physical counter, such as in an airport or currency exchange.This can also take place over the internet through the use of brokerage platforms, which also utilizes speculation or leverage and is known as forex trading.Overall, the forex market presently is one of the world’s largest trading markets by volume. This includes both retail and institutional traders.The FX market presently turns over in excess of $5 trillion every day, with the most exchanges occurring between the US dollar and the Euro (EUR/USD), followed by the US dollar and the Japanese yen (USD/JPY), then the US dollar and British pound (GBP/USD), according to the Bank of International Settlements (BIS) latest survey.Foreign Exchange Trading Now Available to EveryoneOver a period of time, exchanging currencies causes a country’s currency to fluctuate in value in relation to another currency. This is defined as the exchange rate. Trading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.However, recent innovations and technology has made normal forex trading now accessible for even normal individuals. Forex exchange trading is a complicated practice though can be learned easily with the help of many retail brokers. Most commonly, users can gain valuable practice using demonstration accounts that rely on trading with demo money, before ultimately trading with actual money.
Foreign exchange (forex) represents the practice of exchanging or converting a specific country’s currency into another country’s currency. A popular example includes the conversion of the Australian dollar (AUD) into US dollars (USD), and/or vice versa. There are a variety of mediums this can occur over. In its most basic form, the exchange of currencies can be handled over a physical counter, such as in an airport or currency exchange.This can also take place over the internet through the use of brokerage platforms, which also utilizes speculation or leverage and is known as forex trading.Overall, the forex market presently is one of the world’s largest trading markets by volume. This includes both retail and institutional traders.The FX market presently turns over in excess of $5 trillion every day, with the most exchanges occurring between the US dollar and the Euro (EUR/USD), followed by the US dollar and the Japanese yen (USD/JPY), then the US dollar and British pound (GBP/USD), according to the Bank of International Settlements (BIS) latest survey.Foreign Exchange Trading Now Available to EveryoneOver a period of time, exchanging currencies causes a country’s currency to fluctuate in value in relation to another currency. This is defined as the exchange rate. Trading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.However, recent innovations and technology has made normal forex trading now accessible for even normal individuals. Forex exchange trading is a complicated practice though can be learned easily with the help of many retail brokers. Most commonly, users can gain valuable practice using demonstration accounts that rely on trading with demo money, before ultimately trading with actual money.
Read this Term reserves on behalf of Treasury - providing market intelligence and analysis for BoE policy committees
Huw Pill is Bank of England Chief Economist and Executive Director for Monetary Analysis and Research
- is a member of the Monetary Policy Committee
- is responsible for the analysis the BoE use to make monetary policy decisions
Fergall Shortall is Director of Monetary Analysis