MPC worried about UK current account deficit, notes house

No surprises in the MPC Meeting Minutes: unanimous decisions all around. However, the notes are interesting. These are the minutes from the April meeting which saw no change in policy. A unanimous vote was expected in both policy tools: an interest rate of 0.50% and a QE program of 375 billion pounds. In recent years, many MPC rate decisions have turned into non-events while the release of the meeting minutes as well as the quarterly inflation reports saw more fireworks.

GBP/USD traded on high ground at 1.6820 before the release. The currency is shaking but eventually remaining in the same trading zone.

Regarding housing, the MPC sees momentum in house prices, especially in London. The near term inflation pressured are eased further, as we already know from the recent drops in UK inflation.

The risks of the widening current account deficit are also noted and interestingly, the MPC also sees risks in the low level of inflation in the euro-area. Do they also want to see a weaker euro?

Public Sector Net Borrowing was expected to rise from 7 (revised down from 7.5) to 8.9 billion pounds. The actual figure is 4.9 billion – better than expected.

The round number of 1.68 works as a pivotal line within the recent trading range. Further support is at 1.6770. Resistance is at the new multi-year high of 1.6841.

For more, see the GBPUSD prediction.