Breaking: GBP/USD crashes as BOE says Brexit damage has increased
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The Bank of England left its policy unchanged as expected but slashed its growth forecasts and says that the Brexit damage has increased.
The Old Lady slashed the 2019 GDP forecast to 1.2% against 1.7% beforehand. For 2020, growth is now expected to print 1.5% against 1.7%. CPI to temporarily fall below 2% in coming months. They say that lower GDP forecasts reflect a softer global economy, greater Brexit uncertainty effects in the UK.
GBP/USD towards 1.2850, extending its losses. After the initial slide, GBP/USD stabilizes, but at lower ground.
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They also cite issues about the global economy. Up to now, the central bank assumed a smooth transition and emphasized the strength of the economy. Now they probably see less strength than previously.
Here is a quote from their publication:
The economic outlook will continue to depend significantly on the nature of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth
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