As expected, the MPC voted unanimously to keep monetary policy unchanged. The bank rate stays at 0.75% and the BoE will continue its bond buying programme at the current level of £435 billion. GBP/USD shifted lower in choppy trading.
There were no fireworks from the BoE. Instead a fine display of balancing positives and negatives. The central bank looked to be going out of its way to keep on an even keel.
• On the one hand, the BoE raised growth forecasts for 2019, 2020 and 2021. On the other, it cut inflation forecasts.
• It signalled that it was still minded to tighten monetary policy and that the path of hikes was steeper than what the market currently expects. Yet, Mark Carney & co. also said that they were in no rush with the cost of waiting low.
• Mark Carney highlighted the improving prospects for the global economy, whilst saying that domestic tensions remained elevated.
• Business investment was low and was expected to remain that way possibly leading to the longest decline in business investment in modern history. Yet companies are still hiring and the labour market remains robust.
Super Thursday was not really that super, instead rather average with most positives balanced out with a negative. If the central bank was trying to leave the spotlight firmly on Brexit and the UK political scene they succeeded. Pound traders will shift their gaze back to cross party talks and the local elections.
The dollar moved higher in the previous session after the Fed opted to stay neutral, whilst pouring cold water on the prospect of a rate cut by the end of the year. Dollar traders will now look ahead to the US non farm payrolls.
GBP/USD levels to consider
At the time of writing the pound is flat on the day at $1.3049 after falling from a session high of $1.3081 earlier this morning. Initial support can be seen at $1.3011, before $1.2975. On the upside resistance can be seen at $1.31 and $1.3130/5.
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