BOE Quick Analysis: Three hawkish developments that may send GBP/USD even higher, levels


  • The Bank of England has left interest rates unchanged with a significant majority.
  • The bank still aims to raise rates at some point. 
  • It states that near-term uncertainties have receded.

No Carney carnage – not this time and not later, as this is Governor Mark Carney's last rate decision. The Bank of England has not only left interest rates unchanged in what was a coin-flip decision – but also seemed calm.

Here are the hawkish developments that may allow GBP/USD to extend its gains:

1) More tightening? 

While the "Old Lady" revised its growth forecasts down – acknowledging reality – it still intends to raise rates. Here is a passage from the penultimate paragraph, emphasis mine:

Further ahead, if the economy recovers broadly in line with the MPC's latest projections, some modest tightening of policy may be needed to maintain inflation sustainably at the target

This hawkish bias may also underpin further gains.

2) Only two dissenters

Economists had expected no fewer than three out of nine members of the Monetary Policy Committee to vote against the decision. The new dovish dissenter that some had speculated about was Gertjan Vlieghe, who expressed his concern early in January.

However, Vlieghe sided with the majority, showing there is no broad support for cutting rates.

3) Upbeat tone

The BOE is seeing lower uncertainty, more robust business activity – even investment seems to have picked up. 

Domestically, near-term uncertainties facing businesses and households have receded. Surveys of business activity have picked up, quite markedly in some cases, and investment intentions appear to have recovered

Moreover, Mark Carney concludes the list of recent developments as "positive." 

Overall, while the London-based institution is sounding the necessary disclaimers of caution, it is generally optimistic. 

GBP/USD levels

GBP/USD after BOE hawkish hold January 30 2020

GBP/USD has bounced from around 1.30 to closer to 1.31. However, the upbeat tone can send higher. The levels to watch are 1.3175, 1.3210, 1.3285, and even the post-election peak of 1.3510. 

Support awaits at 1.30, 1.2955, and 1.29.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD loses 1.1800 amid escalaing US-Sino tensions

EUR/USD dips sub-18 after the US reported an increase of 1.763 million jobs in July, better than estimated but pointing to a deceleration. Escalating Sino-American tensions are boosting the dollar and fiscal talks are eyed. 

EUR/USD News

GBP/USD resumes decline, weighed by UK concerns, US-China conflict

GBP/USD trades at fresh weekly lows below 1.3050 as the dollar got a sudden boost from mounting tensions between the world's two largest economies. UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever.

GBP/USD News

XAU/USD drops $50 from record highs to the $2020 area

Gold prices are falling sharply on Friday, trading below $2040/oz at the moment. Earlier on Friday, the yellow metal reached at $2075, a new record high.

Gold News

Bitcoin may extend the recovery once Gold resumes the rally

Gold retreated from the recent highs, but the sentiments are still bullish. Cryptocurrencies resumed the upside, some altcoins are demonstrating strong gains. ETH/BTC stopped the downside correction and settled at $0.03300.

Read more

WTI extends slide toward $41, on track to post weekly gains

Crude oil prices continued to fall on Friday and the barrel of West Texas Intermediate (WTI) touched a daily low of $41.05 before recovering modestly.

Oil News

Forex Majors

Cryptocurrencies

Signatures