Bank of England-led FX committee flags orderly UK currency markets, lower turnover

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02.07.2026

Bank of England-led FX committee flags orderly UK currency markets, lower turnover — Sterling markets remain stable

Wholesale foreign exchange market participants meeting under the Bank of England's London FXJSC say sterling markets remain orderly as investors assess geopolitical risks and shifting currency drivers. Minutes from the 26 March 2026 meeting also show daily average FX turnover fell 5% from the previous survey, although it stayed 20% higher than a year earlier.

Highlights

Bank of England's FX committee finds UK currency markets functioning orderly with only moderate volatility since the Middle East conflict began.
Sterling remains resilient, supported by interest rate differentials and easing political risk premia, while short-term U.S. dollar demand rises as a safe haven.
Committee discusses digital asset applications for FX, noting distributed ledger technology's potential benefits but slow adoption and limited mainstream use.

Committee discussions on markets and technology

As reported by Bank of England, the London Foreign Exchange Joint Standing Committee reviewed recent market conditions, turnover trends and digital asset developments at its 26 March 2026 meeting in London.

Paul Robson of NatWest Markets and Vasileios Gkionakis of Aviva Investors told the committee that sterling remains relatively resilient, supported by interest rate differentials and easing political risk premia. They also say the Middle East conflict supports short-term safe-haven demand for the U.S. dollar, while the duration of the related supply shock remains an important near-term driver for currencies.

The committee says FX market functioning remains orderly, even though the start of the conflict is challenging as participants absorb the news. Members also note cautious wait-and-see positioning across FX markets, reflected in only moderate volatility since the conflict begins.

On digital assets, Alina Ishmuratova of JPMorgan outlines potential FX uses including intraday funding and settlement supported by distributed ledger technology. The discussion highlights possible balance sheet, transparency and settlement-risk benefits, but members agree adoption remains slow and these tools are not yet in active mainstream use across FX markets.

Our earlier GBP/USD outlook examined how the Pound’s direction is being shaped by the Bank of England’s balancing act between persistent services inflation and signs of softer UK growth. We also highlighted a technically bullish but overbought setup, pointing to a likely consolidation range unless key support breaks, with upcoming Bank of England communications seen as a potential catalyst for the next move.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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