BoE: Optimistic message to lift GBP/USD above 1.32


The Bank of England (BoE) has left its policy unchanged, without dissent toward negative rates. Growth forecasts have been substantially upgraded while officials are content with positive high-frequency figures. In the meantime, GBP/USD has hit 1.3183, the highest since March, showing that the BoE's decision includes powerful punches, propelling the pound, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“All nine members of the Monetary Policy Committee voted to leave interest rates unchanged. The specter of sub-zero borrowing costs previously weighed on sterling. Andrew Bailey, Governor of the BoE, 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.”

“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.”

“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 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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits the highest in a month on stimulus hopes

EUR/USD has advanced toward 1.1850, reaching the highest since mid-September. US lawmakers have reportedly narrowed the gap in stimulus talks. The safe-haven dollar is on the back foot and investors are shrugging off concerns about new European COVID-19 cases.

EUR/USD News

GBP/USD bounces on better market mood

GBP/USD has recaptured the 1.2950 level after a call between Brexit negotiators was labeled as constructive. PM Johnson is set to put the Greater Manchester area under lockdown and US fiscal stimulus talks are eyed.

GBP/USD News

XAU/USD struggles for direction, stuck in a range near $1900 mark

Gold extended its sideways consolidative price moves through the early North American session and remained confined in a narrow trading band, around the $1900 mark.

Gold News

US Markets React: Gold gains, equities and dollar tumble on stimulus jitters

The stimulus election minute, the most popular dance in Washington, went through another few elaborate rounds on Capitol Hill today with Nancy Pelosi's office reporting progress in afternoon talks with Steven Mnuchin.

Read more

WTI extends the consolidation around $40.00 ahead of API

Prices of the barrel of WTI extend the consolidative mood for yet another session on Tuesday, always around the key $40.00 level.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures