The Bank of England (BoE) is embracing strong data and surveys as the UK reopens and may outline tapering and 2022 rate hikes. GBP/USD should test the upper bounds of its recent 1.36-1.40 range, in the view of economists at Westpac.
PM Johnson to raise taxes
“The return of Parliament this week has seen a swift move to increase taxes to start paying for pandemic costs. These increases mean that the UK will now have the highest level of tax take as a proportion of national income in over 70 years. However, the BoE stated that the tax increase is not fiscal tightening due to broad increases in spending.”
“Further comments from almost all MPC members this week suggest that the UK is set not only to reduce its Asset Purchasing but also to line up rate increases in the coming year.”
“Despite interim pullbacks, GBP/USD still looks set to test the upper bounds of its recent 1.36-1.40 range into the BoE meeting.”
