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GBP/USD surges on upbeat tone from the BOE

The Bank of England decided to leave the interest rates unchanged as widely expected, but gave us some positive hints. It wasn’t in the voting pattern: 7 voted against and only two remained in favor of raising the interest rates.

However, they discussed removing some stimulus “in the coming months”. This is significant. It may be a response to the stronger than expected inflation figures reported earlier in the week. Nevertheless, it is hard to see the BOE make a real move. They would like to have a higher exchange rate but not to raise interest rates.

More specifically, the Bank of England noted that growth had superseded their expectations in the third quarter. All the members of the Monetary Policy Committee agree that rates will rise at a fast pace than the current expectations.

They do have notes of caution, which markets tend to ignore at the moment. They repeated their regular stance that hikes will be gradual. In addition, they do not downplay downside risks.

More:    GBP/USD: Too Early For A BoE Hike In November But Positive Momentum In Place

GBP/USD likes that and jumps to 1.33, around 100 pips above previous levels. Update: the high so far is 1.3336. The pair has reached a new high for 2017, back to the higher levels of the initial post-Brexit levels of 1.28 to 1.35. 1.20 is far behind.

Here is how it looks on the hourly chart:

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.