Monetary policy normalization planned by the BoE is a GBP-positive argument – Commerzbank

Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, analyzes the last Bank of England’s (BoE) move and its implications for the Pound Sterling (GBP).

Money should always and everywhere be scarce

The BoE is planning to get rid of the securities that it, like the other major central banks, accumulated after the Great Financial Crisis of 2008. 

I am neither a money market expert nor a banking sector expert. Therefore, I cannot promise you that this plan will succeed. However, my idea of monetary theory tells me that money should always and everywhere be scarce – even in the interbank market. Otherwise, it smells strange to me. Even if things have been going well for almost 16 years.

Apart from all the other arguments for or against the Pound, I, therefore, believe that the monetary policy normalization planned by the BoE, which is unique in this sense, is a GBP-positive argument.