The Bank of England's (BOE) Monetary Policy Committee (MPC) decided to leave the policy rate unchanged at 0.1% at its June policy meeting as expected. Furthermore, the BoE ramped up the Quantitative Easing (QE) program by £100 billion to £745 billion.
Follow our live coverage of the BoE event and the market reaction.
With the initial market reaction, the GBP/USD pair edged higher and was last seen gaining 0.08% on the day at 1.2545.
BOE Quick Analysis: Three reasons to sell sterling as Bailey seems burned out.
The BOE met expectations by announcing it is expanding its bond-buying scheme by £100 billion. Its total support for the government's efforts to mitigate coronavirus now stands at £300 billion, yet may be insufficient and the UK's slow emergence from fighting the disease.
GBP/USD jumps back closer to session tops, around mid-1.2500s post-BoE.
The GBP/USD pair has managed to recover a major part of its early lost ground and moved back closer to session tops, post-BoE.
Key takeaways from the policy statement
"Asset purchases can now be conducted at a slower pace."
"In order to complete the existing programme of asset purchases, the bank would continue to purchase corporate bonds, such that around 10 billion pounds of these bonds were purchased by the end of the programme."
"Remainder of the existing programme comprised of further government bond purchases."
"Andrew Haldane voted against QE expansion."
"Haldane sees recovery in demand and output was occurring sooner and materially faster than had been expected at the time of the previous MPC meeting."
"Haldane sees material downside risks, especially to employment, but more evenly balanced than in May."
"In an environment of heightened uncertainty, some members envisaged a role for monetary policy in seeking to mitigate the potential impact of more adverse economic scenarios, including the second wave of COVID-19."
"Some members noted that risk management considerations favoured a prompt response to downside risks at present in order to ensure a sustained return of inflation to the target."
"Recent demand and output data had not been quite as negative as expected, other indicators suggested greater risks around the potential for longer-lasting damage to the economy from the pandemic."
"UK corporate bond purchase target unchanged at £20 billion."
"UK gilt purchase target stands at £725 billion."
"Risky asset prices have recovered further from their March lows, although they have remained sensitive to the news on the evolution of the pandemic."
"Recent data out turns suggest that the fall in global GDP in the second quarter of 2020 will be less severe than expected at the time of the may monetary policy report."
"There are signs of consumer spending and services output picking up."
"Evidence from more timely indicators suggests that GDP started to recover after April."
"Labour market has weakened materially."
"A greater number of workers are likely to be furloughed in the second quarter."
"Current below-target rates of CPI inflation can in large part be accounted for by the effects of the pandemic."
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.