Sterling weakness does not tend to boost UK exports

While testingifying before the Treasury Committee on Wednesday, Swati Dhingra, who is due to become a Bank of England policymaker in August, said that sterling weakness does not tend to boost UK exports, as reported by Reuters.

Additional takeaways

“UK’s trade openness appears to have declined more than peers, hard to be fully certain that is due to Brexit.”

“I do not think Brexit has yet caused the boe to pursue a more aggressive interest rate policy.”

“Brexit unlikely to change UK economic structure, will drag on real wages.”

“Brexit trade agreement likely to lead to 1.8% fall in real wages in medium-term.”

Looks like there is more to come on inflation, from higher import costs being passed on.”

“I am most uncertain whether quantitative tightening will reduce inflation.”

“QT is a very new policy, we do not yet know its impacts, past QE impact on inflation unclear.”

“Best to take a gradual approach to QT, learn as we go along.”

“Giving interest rate paths for individual MPC members would cause confusion.”

Market reaction

GBP/USD continues to push lower and was last seen losing nearly 0.6% on the day at 1.2112.

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