Bank of England Governor Megan Greene: Monetary Policy Challenging Amid Supply Shocks

The Bank of England’s emphasis on the challenges of monetary policy amid supply shocks indicates that interest rate increases will continue. This stance could heighten risk‑aversion in global markets, potentially driving declines in equity indices. In Turkey, the high global interest rate environment may weaken the lira and exert upward pressure on foreign exchange rates. Short‑term market volatility is expected to rise.

The Bank of England’s tightening policy stance may bolster the pound against the yen. A 24‑hour rise of 0.06% and the fact that the 20‑period simple moving average (SMA20) sits above the 50‑period SMA (SMA50) indicate short‑term upward pressure. The relative strength index (RSI) is at 63, close to the over‑bought zone but not yet over‑bought; the MACD is slightly below the signal line, adding short‑term uncertainty. Overall, a modest upward trend in GBP/JPY is expected over the next 1–3 days.

The Bank of England Governor’s emphasis that monetary policy will be difficult during the period of supply shocks could be interpreted as a positive signal for GBP in the market. High interest‑rate expectations and efforts to combat inflation may create short‑term upward pressure on the currency pair. However, since the market is already in a mild uptrend, the move is likely to be limited. Therefore, a modest rise in GBPUSD is forecast over the next 1‑3 days.