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Morten Lund, Analyst at Nordea Markets, notes that as widely expected, the Bank of England kept its policy rate on hold today and not much news was offered as the central bank is waiting for news surrounding the UK’s withdrawal from the European Union.

Key Quotes

“Bank of England (BoE) kept both the Bank Rate and the bond purchase programme unchanged. This was widely expected after the central bank hiked the policy rate with 25 bp to 0.75% at the latest meeting in August.”

“The only little question mark was whether there would be any dissentients to the keep the rate on hold. However, the decision was unanimous (9-0 vote to hold). Hence, the  new (external) board member, Jonathan Haskel, – who has replaced arch hawk, Ian McCafferty – followed the majority.”

“In the meeting minutes, the committee stated that  the economy is still developing as anticipated in the August inflation report.”

“The appetite for a weaker GBP remains very limited within the MPC, as any further GBP weakness will mean overshooting the inflation target. In sum this is a  text book “non-event”.”

“Unless we get a cliff-edge no-deal scenario for Brexit, then the GBP remains very cheap. Bank of England is “backing” the long GBP bet as well (as they have been since August).”

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