BOE Quick Analysis: Three pound-positive on Super Thursday open door to new highs

  • The Bank of England has left its policy unchanged, without dissent toward negative rates. 
  • Growth forecasts have been substantially upgraded. 
  • Officials are content with positive high-frequency figures.

Non-event? GBP/USD has hit the highest since March, showing that the Bank of England's decision is included powerful punches, propelling the pound. 

Here are three factors that are sending sterling higher:

1) No negatives is a positive 

All nine members of the Monetary Policy Committee – including several previously outspoken doves – voted to leave interest rates unchanged. Te specter of sub-zero borrowing costs previously weighed on sterling.

Andrew Bailey, Governor of the Bank of England, said that such a move is "under active consideration" but then hinted it is not imminent. The fresh unanimous vote seems to put the nail in the coffin of negative rates, which would have weighed heavily on the pound.

2) Upgraded forecasts

The British economy is still set to contract in 2020 – COVID-19 is taking its toll. Nevertheless, this decline has now been trimmed to single digits – 9.5% against 14% beforehand. That is a substantial upgrade.

While the BOE also trimmed growth forecasts for the next two years – a slower recovery – it is hard to foresee too far into the future given the high uncertainty surrounding the virus. Moreover, Britain exits the Brexit transition period in 2021 and without a new accord, everything is uncertain.

3) Short-term optimism

While looking six months into the future is hard, the recent past is easier to assess. The "Old Lady" is getting up to speed with high-frequency figures and states that higher frequency indicators imply a rebound in spending. 

That sentiment echoes the words of Chief Economist Andy Haldane, who said "so far, so V" when talking about the recovery. The BOE is wary of new outbreaks but seems to opt for the glass half full.

GBP/USD implications

Pound/dollar has hit a daily peak of 1.3183 – the highest since March – before consolidating its gains. Cable may continue higher after the BOE's upbeat message, potentially breaking above 1.32, thus reaching levels that were last seen in February. 

The next significant moves depend on the disease – which remains the boss. 


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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD remains depressed below the 1.1600 threshold

 EUR/USD struggles to regain the 1.1600 level after falling to a fresh weekly low of 1.1580. The dollar benefited from solid US macroeconomic data but softer yields capped its gains.


GBP/USD accelerates slide to 1.3760

 GBP/USD advanced to a daily high of 1.3830 during the European session but reversed its direction in the second half of the day. Fading BOE rate hike expectations and Brexit-related headlines weigh on the pound.


Gold losing its shine and the 1,800 threshold

Gold edged lower on Wednesday, trading as low as $1,782.31 a troy ounce. The greenback strengthened ever since the day started against its commodity-rival, getting a boost early in the American session from upbeat US data and rallying equities.

Gold News

Small correction ahead of cryptos before next leg up

BTC struggles cross above the Tenkan-Sen, could create profit-taking and a corrective move. ETH breaks out above a bullish continuation pattern, but momentum is weak. XRP continues to lag BTC and ETH but is poised to catch up in relative performance.

Read more

Bank of Canada Rate Decision: Inflation prospects headline policy review Premium

The Bank of Canada is expected to continue tapering its asset purchases and maintain its current rate posture when it concludes it meeting on Wednesday at 10:00 am EDT. Overnight rate projected to be unchanged at 0.25%.

Read more