FXStreet reports that MUFG Bank experts discuss prospects for the pound.

“The positive turnaround for the pound followed a speech yesterday from MPC member Tenreyro on the potential effectiveness of negative rates as a policy tool. She stated that the BoE may need to deliver more stimulus to the UK economy, and it’s important for officials to maintain the option of lowering rates into negative territory. The positive pound reaction appears to reflect some relief that she did not strengthen her call for the use of negative rates.”

“The UK rates market remains skeptical that the BoE will lower their key policy at their next policy meeting in February. In contrast, we have become more confident recently that the BoE will take policy action and lower rates into negative territory which poses downside risks in the coming weeks and months ahead.”