Yesterday’s decision of the Federal Reserve to raise interest rates was certain for the markets. Just as the fact that the Bank of England (BoE) will maintain its own rates unchanged. Investors were far more interested in the Bank of England lookout at the current economic situation. Comparic.com checked how for this decision reacted pound sterling.
Interest rates are still at 0.25%
As expected, the main interest rate of Bank of England remained unchanged at 0.25% (unanimous decision). Policy objective of assets purchases remains at 435 billion pounds, and the level of buying corporate bonds at 10 billion pounds. The main headlines from the statement polmon below:
- The appreciation of the GBP in the last month indicates less “pop” inflation than suggested by the November forecast
- Monthly volatility will remain at the levels forecasted by the markets with the development of the situation on the line of UK-EU
- GDP for Q4 2016 at 0.4%, inflation should reach 2% in 6 months
- Long-term interest rates have risen partly due to looser fiscal policy in USA
- Monetary policy can in different ways respond to changes in economic prospects
- The Bank of England will take all necessary steps to ensure that inflation expectations are properly balanced
- The independence of the Bank of England and the implementation of inflation targeting is the key
Full text of the statement of monetary policy, together with minutes is available on Bank of England site.
Pound sterling without much excitement
At the time of publication of the decision of the BoE, GBP / USD slides about 30 pips, breaking the level of Fibonacci retracement and the 1.2460 round support:
Markets generally receive Mark Carney statement as dovish. On the other hand, investors did not hear anything you did not expect before. Accordingly, the reaction of pound was quite limited.
EURGBP simillar reaction returns to Tuesday lows: