Pound dips as BoE retains cautious approach

There’s been some small scale selling seen in the pound in recent trade after the Bank of England announced the outcome of their latest policy decision. Some speculation that MPC member Saunders would dissent proved misplaced as the rate-setting committee voted unanimously to keep the official rate unchanged at 0.75. The accompanying statement provided little real new information as to the future path of monetary policy with increases in the growth forecasts tempered by a sizable cut to next year’s inflation forecast in what overall amounts to a fairly balanced update.

With the announcement of a further and longer extension to Brexit deadline since the bank last met, there was some suggestion that this would allow for a more hawkish approach but this hasn’t really transpired. The chances of a rate hike anytime soon remain remote at best and it seems that Governor Carney and his fellow MPC members continue to operate in wait-and-see mode. Attention will now turn to Carney’s press conference at the bottom of the hour with traders waiting to see if he follows the approach Jerome Powell last night, when the Fed chair walked back what seemed like a slightly dovish message in the statement and caused the USD to reverse its losses and end the day on its highs.