GBP/USD drops below 1.3300 on dovish BoE commentary, USD strength
- GBP/USD dropped below 1.3300 during the American session.
- BoE's Ramsden says that they can step up the pace of QE if needed.
- US Dollar Index continues to push higher toward 93.00.
The GBP/USD pair came under renewed bearish pressure during the American trading hours and touched a fresh daily low of 1.3829. As of writing, the pair was down 0.62% on the day at 1.3298.
Dovish tone from BoE officials hurt GBP
The dovish commentary from Bank of England (BoE) officials seems to be weighing on the British pound on Wednesday. While presenting the BoE's annual report, Deputy Governor Dave Ramsden said that the BoE could step up the pace of quantitative easing (QE) significantly if needed. "We have headroom to do materially more QE," Ramsden added. "We could do it fast if market dysfunction required it."
Additionally, Governor Andrew Bailey said that it's very important for the BoE's framework to be robust enough so they can "go big and go fast." Moreover, Bailey noted that inflation expectations have been pretty stable.
Moreover, BoE policymaker Gertjan Vlieghe argued that it's possible to unwind a part of the balance sheet without affecting the economy, as long as markets continue to function well.
On the other hand, the broad-based USD strength caused GBP/USD to extend its daily slide. The US Dollar Index, which slumped to its lowest level in more than two years below 92.00 on Tuesday, is staging a decisive rebound and was last seen gaining 0.52% on the day at 92.80.
Earlier in the day, the data published by the ADP Research Institue showed that private-sector employment in August increased by 428,000. Although this reading came in much worse than the market expectation of 950,000 the negative impact on the USD was short-lived.
Technical levels to watch for