The Bank of England may reduce lending in the United Kingdom. The central bank says this step may be implemented through capital regulation. The central bankers say that British households are getting their debts growing at the same pace the GDP is growing, which is why the households can afford to service their debts.
Still, they are concerned that if these debts have gone excessively high, this may well destabilize the situation in the entire British economy. With that being said, such threats should be anticipated and require preventive actions.
Since the recent financial crisis, the Bank of England has been focused mainly on increasing the immunity of the British financial system to various future economic and financial shocks as well as preventing the risks of further lending booms. For now, regulating he capital of British banks and other related steps have been the key instruments for reaching those goals. The central bank sees interest rate hikes as a last-resort solution. Still, some experts say that given a weak inflation rate, the Bank of England is unlikely to raise the interest rates in the near future.
FOREX
Meanwhile, the British Pound is still trying to recover from the long-term trend against the U.S. Dollar, MasterForex-V Academy experts say. GBPUSD has completed a bearish move – wave A/B of level H4. Today, the price is moving up within the scope of wave A/B of level H1. A break below 1.4382 will indicate the start of the bearish move – wave 3/C of level H16. The closest levels of support are 1.4387, 1.4243, 1.4350, and the bottom of the ascending MF sloping channel. On breaking above 1.4578, the currency pair will start wave 3/C of level H16 in the upward direction with key resistance levels at 1.4593 and 1.4668.
