The Bank of England left policy unchanged as widely expected. The interest rate remains at 0.50%, for the umpteenth time, and the level of QE stands put at 375 billion pounds. This time, it didn’t release a statement, contrary to the previous meeting, when Mark Carney made his mark with a statement and hit the pound. It seems that the market feared some dovish statement.
GBP/USD was trading at around 1.5180, a bit under the highs it rose to after the release of a better than expected manufacturing PMI number. GBP/USD now trades at 1.5222.
Update: GBP/USD extends its move higher and reaches 1.5237. The pound is also stronger against the euro, with EUR/GBP falling under 0.87.
Update 2: The BOE did say that the much expected inflation report on August 7th will include a “review on forward guidance”. So, more fireworks from the BOE in less than a week.
In the previous decision in July, the BOE released a statement that warned about high interest rates. It seems that Carney wants to keep long term interest rates low, but without injecting new QE. It’s important to remember that inflation is at the top end of the 1-3% range.
Releasing a statement without a change in policy is a rarity for the central bank. And the results of this warning were seen in the “Carney Crash“. Despite the dovish statement, the minutes of the meeting later showed that the MPC voted unanimously against the QE, contrary to previous meetings.
Opinion: Carney to weaken Sterling further
GBP/USD traded vigorously between a three year low of 1.48 to 1.54, but was unable to break higher.
For more lines, events and analysis, see the GBPUSD forecast.
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