BoE’s Greene Anticipates Trade Diversion Effects Stemming from China

BoE’s Megan Greene Flags Uncertainty Over UK Economic Weakness, Highlights Global Trade Risks

Bank of England (BoE) policymaker Megan Greene expressed uncertainty on Friday about the underlying causes of the UK’s economic slowdown, raising questions over whether the drag is primarily driven by weakened demand or constrained supply. Speaking in comments reported by Reuters, Greene outlined a broad set of concerns ranging from sluggish productivity and fiscal policy impacts to global trade tensions and their implications for inflation.

Her remarks paint a complex picture of the current macroeconomic environment, where domestic vulnerabilities intersect with international uncertainty — particularly around evolving tariff policies and trade realignments involving China and the United States.

Source: create.vista.com

Market Reaction to the BoE’s Anticipaion

The market response to Megan Greene’s comments was relatively muted. Despite her candid insights into the challenges facing the UK economy — including productivity concerns, fiscal risks, and potential global trade shifts — the British pound showed limited immediate reaction. At the time of writing, the GBP/USD pair was down 0.2% on the day, trading around 1.331.

This slight decline suggests that traders may have already priced in many of Greene’s concerns or are waiting for more concrete economic data before adjusting their positions. Additionally, the market may be taking a cautious stance amid broader uncertainty surrounding central bank policy direction, geopolitical trade tensions, and upcoming macroeconomic reports. While Greene’s remarks highlight underlying risks, they fell short of signaling any imminent policy shift, likely contributing to the subdued currency movement.

Still, with her warning about an emerging output gap and the disinflationary risks of tariffs, market participants will likely remain attentive to future BoE commentary and UK economic indicators for clearer signals on the monetary policy outlook.

Get free access to our lifetime VIP membership. Join us here.