The Sterling pound today spiked to new daily highs after the Bank of England announced its monetary policy decisions early in the London session. The GBP/USD currency pair later gave up most of its gains as investors digested the BoE’s seemingly dovish stance on the economy amid calls for more stimulus.
The GBP/USD currency pair today spiked to a high of 1.2417 after the BoE rate decision, but later gave up most of its gains to trade near its daily lows at 1.2310 printed at the open.
The currency pair had little momentum at the start of today’s session as traders waited for the BoE’s decision. The pair rallied higher after the bank’s Monetary Policy Committee released its monetary policy report at 6:00 GMT. The report showed that two MPC members Michael Saunders and Jonathan Haskel, wanted the bank to expand its current quantitative easing programme. The existing plan has a target of £645 billion, which could run out by July; hence, the need to expand it. The BoE left interest rates at 0.10%, and most analysts expect the rate to remain unchanged for the rest of the year. The bank also expects UK GDP to contract 14% this year and to grow by 2% in 2022.
Andrew Bailey, the BoE Governor, commented that the adverse effects of the current lockdown could last up to a year. Still, the economic recovery could be faster than during the 2008 financial crisis.
The cable’s future performance is likely to be affected by geopolitical events and the US jobless claims report due later today.
The GBP/USD currency pair was trading at 1.2358 as at 09:52 GMT having fallen from a high of 1.2417. The GBP/JPY currency pair was trading at 131.60 having dropped from a high of 132.08.
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Pound Spikes Higher on BoE Rate Decision, Retreats on Dovishness
