The Great Britain pound was exceptionally strong on Wednesday after the release of the Bank of England policy minutes. The report was considered to be more hawkish than markets were counting on, leading to a surge of the sterling against other currencies.
Policy makers did not make any changes during their latest meeting, yet the minutes of the gathering looked relatively optimistic. Not everything was positive, though, as the report mentioned that consumer inflation “had fallen to zero in February and had stayed there in March” and may even turn into deflation for a brief period of time.
Regarding interest rates, the minutes said:
The path of Bank Rate expected by financial markets was now exceptionally flat.
Yet as for the outlook from the BoE itself, the bank’s members expect an increase of borrowing costs over the next three years:
There was a range of views over the most likely future path of Bank Rate, but all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period.
It is also interesting to note the Britain’s central bank had rather positive view on developments in the eurozone economy:
In the euro area, indicators had suggested a strengthening economy.
The pound leaped after the release of the policy minutes and continued to move up afterwards. While the currency slowed it rise as of now, it retained its upward bias.
GBP/USD jumped from 1.4928 to 1.5040 as of 21:04 GMT today. GBP/JPY climbed from 178.61 to 180.29 while EUR/GBP tumbled from 0.7189 to 0.7129.
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