Pound Sterling continues its bullish rally ahead this last month period. That is in line with the seasonal strengthening happened every April which is planned before by most of the currency analysts.
The rally motor in last some days related to the speculation about the plan of tapering owned by the Bank of England or BOE. However, there is still a new risk from another issue which comes again.
That is the issue of the Scottish independence referendum. Tapering itself is a gradual reduction of the valuable assets purchasing. It becomes a part of a Quantitative Easing in some major central banks.
Tapering Is a Sign of Increasing Interest Rate
In fact, that decision is usually becoming an intro if the interest rate will increase. That has the positive impact on the related currency. Lately, this topic is becoming a focal point again.
It is because the continuing economy recovery and the better COVID-19 vaccination programs which are done widely in various countries. That is started at the beginning of 2021. How come?
The monetary stimulus will be not needed anymore in line with the area economy recovery. Elsewhere, the Bank of Japan or BOJ starts the mini tapering in 19 of March by cutting its routine stock purchasing.
They don’t buy many stocks in a row like what happened in the past. They will only buy it when the stock market is falling. It is the strategy or decision that they are going to do in the future.
Bank of Canada Did The Same Thing
Bank of Canada or BOC also started the tapering for its quantitative easing program. It was started last week. The obligation purchase speed was cut from CAD 4 billion per week becomes CAD 3 billion.
At the same time, they give a sign that BOC will increase the interest rate. The probable time is in the second quarter of 2022. Now, many analyst are speculations that the British central bank can do the same thing.
The NatWest Market and HSBC predicted that BOE may decreasing the obligation purchasing scale in a meeting that is going to be held in 6 of May. NatWest explicitly made a prediction.
They predicted that the obligation purchase from around GBP 18 billion per week will become only GBP 14 billion per month. That is the most rational calculation to use in the future based on them.
Tapering Has Been Started
It cannot be denied that tapering has been started. However, it is not begun by The Fed or ECB. Bank of Canada is the party that makes it. This progress in fact is something crucial for people.
There is a possibility that the investors will start to think that the 2021 phase is the tapering one. Meanwhile, the Bank of Canada starts its tapering season. That is so interesting to see..
An analyst thought that the Bank of England on May can push investors’ attentions to think more about that issue. The meeting scheduled on May is the time which is awaited by people.
That is a moment where the gradual tapering on the asset purchase is applied. However, the 6 of May schedule which is announced may only has the small decline. It is not that drastic.
Meanwhile, Euro is Stronger
Elsewhere, Euro is stronger ahead the USD. That happened in the last 24 hours because of the dovish opinion stated by the United States of America Federal Reserve organization.
The EUR / USD position in the middle of the European session was flat. That was around the level of 1.2130 near its closing level two days ago. The experts have their predictions about that.
They thought that the pair has a change to test its highest record in 2021. The level was around 1.2349 which has ever been reached in January.
