The Pound Sterling declined for almost 0.3% around the level of 1.3795 to the US dollar. That was happened in the middle of an European session on Thursday. What is the cause? 

Actually, it was caused by the Bank of England (BOE)  governor’s speech,  Andrew bailey, who stated the dovish clue. Sterling is also weakening to the euro and hindered from further rebound efforts against the yen.

Bailey said that the policy makers should not overreacting to a temporary jump in inflation. He stated that half of the inflation increase lately is caused by the main effects. 

That main effect appears in line with the loosened lockdown rules due to the coronavirus. Those effects will be not stayed longer. It is the point that Andrew believed. 

Bailey’s Opinion Dampen the Rising Interest Rate

It is important for not reacting too much to the strong inflation and growth because they are temporary. It is to ensuring that recovery is not pressured by the too early monetary tightening. 

The opinion threw by Bailed dampen the speculation that BOE has a chance to Increaee the interest rate faster. Before, that rumot spread amidst the market participants globally. 

Furthermore, he also rejects the concerns about inflation which was stated by one of his friends, Andy Haldane. 

a juga menampik kekhawatiran tentang inflasi yang diungkapkan salah satu rekan kerjanya, Andy Haldane. On Wednesday, Haldane said that the inflation may increase by 4 percent at the end of the year. 

The Different Analysis from the Expert

It can be seen that the different opinion happened. Bailey said that the prediction is the Central bank will keep the increase up to 3% only. Then it will be declining to 2%.

2% itself is a target owned by BOE for next year. Besides that, he also think that the British economy is in a rebound situation. The rebound is fast, but the 2022 growth can be slower. 

He stated that his parties will always see the prices movement carefully for the upcoming months. It is also important to make the fast responses if it is needed. 

He noted that the prices increase is stronger, especially for the raw materials. If that increase is stronger, the Central Bank is ready to react with the policy instruments that they have.

Meanwhile, the US dollar is also weakening

The US dollar is weakening although the America NFP or non farm payroll is more than the expectation. It is because the job rate data is lower than what people are expected so far. 

That is fading the optimism of The Fed’s monetary policy tightening faster. When this news was written, the index of dollar slipped by 0.1 percent to the level of 92.4 in the marker. 

The United States NFP is 850000 higher in June and it becomes the highest level in the last 10 months. That achievement is beyond the expectation of 700000 and the May data in 583000.

The sector which add more jobs is the entertainments and service. Then, it is followed by the public service and education sector. That progress is happened in line with the social restriction loosened. 

The Data from the Labor Department

According to the Labor Department records, school activities that began face-to-face at public and private educational institutions also contributed greatly to the addition of jobs in June. 

However, when compared to the pre-pandemic record in February 2020, the US NFP this time fell by 6.8 million, or 4.4 percent. Labor shortages will result in burdening production capacity.

In addition, the reported U.S. Unemployment Rate was worse than expected. That is also a concern for the market. The Unemployment Rate rose to 5.9% in June.

That is although the expectation is that it will fall to 5.6% from 5.8% in May. U.S. Average Hourly Earnings data also disappointed with a 0.3% increase versus expectations of a 0.4% increase