According to the minutes, Bank of England policymakers voted 8-1 against adding to the currency asset purchase program – while voting unanimously to keep rates at the current 0.5% mark. The only dissenter continued to remain BOE policy member David Miles. The UK economist remained steadfast in his vote favoring expansion of monetary policy in order to accommodate near term growth.
Policymakers backed up the ultimate decision noting that “developments in the month had done little to alter” the current argument between policymakers in keeping the current facility unchanged. In addition, with the EU crisis situation becoming a “less pressing” issue, there was ample evidence to keep the status quo.
Notably, this time around, central bankers additionally alluded to a higher pound sterling exchange rate as “unwelcome” and detrimental to the competitiveness of UK exporters – hurting the country’s expansion. The sentiment echoed earlier comments by BOE Governor Mervyn King, who expressed a renewed focus on global currency wars by major trade partners.
All in all, today’s releases show that the Bank of England won’t be cutting rates any time soon, and will likely take on a wait-and-see approach. This is really positive for the GBPUSD, which was previously expected to weaken on forthcoming rate cuts by the central bank.
As bullish as the news is, it seems that the GBPUSD has been rising on expectations of the release and may be in for a bit of a retracement. The pair is now testing resistance at the 1.6300 round figure, which could provide a major roadblock to further advances. A correction here could see a retracement to initial support at 1.6196.
Source: FXTrek Intellicharts