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GBP/USD Analysis: Pound Recovers After the Bank of England Decision
Yesterday, the Bank of England published its interest rate decision. According to ForexFactory, the votes were distributed as follows:
→ rate hike - 0 votes, cut - 2 votes, unchanged - 7 (0 - 2 - 7);
→ forecast: 0 - 0 - 9;
→ previous values: 0 - 1 - 8.
For the first time in the current cycle of interest rate hikes aimed at inflation lowering, two members of the Monetary Policy Committee voted in favour of the rate cut. The dovish tone was echoed by Bank of England Governor Andrew Bailey: "It is likely that we will need to cut the bank rate over coming quarters, possibly more so than is currently priced into markets."
The market's first reaction to the clear signals of the imminent easing monetary policy was the weakening of the pound, including against the US dollar. Thus, yesterday, the GBP/USD rate dropped below the low of April 26 at around 1.245.
However:
→ the US dollar is also affected by the prospect of the Fed's easing monetary policy because the current tight policy puts pressure on the labour market - according to data from May 9, the number of applications for unemployment benefits in the US was the highest since November 2023;
→ Today's UK GDP data (which turned out to be better than expected) supported the pound.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Yesterday, the Bank of England published its interest rate decision. According to ForexFactory, the votes were distributed as follows:
→ rate hike - 0 votes, cut - 2 votes, unchanged - 7 (0 - 2 - 7);
→ forecast: 0 - 0 - 9;
→ previous values: 0 - 1 - 8.
For the first time in the current cycle of interest rate hikes aimed at inflation lowering, two members of the Monetary Policy Committee voted in favour of the rate cut. The dovish tone was echoed by Bank of England Governor Andrew Bailey: "It is likely that we will need to cut the bank rate over coming quarters, possibly more so than is currently priced into markets."
The market's first reaction to the clear signals of the imminent easing monetary policy was the weakening of the pound, including against the US dollar. Thus, yesterday, the GBP/USD rate dropped below the low of April 26 at around 1.245.
However:
→ the US dollar is also affected by the prospect of the Fed's easing monetary policy because the current tight policy puts pressure on the labour market - according to data from May 9, the number of applications for unemployment benefits in the US was the highest since November 2023;
→ Today's UK GDP data (which turned out to be better than expected) supported the pound.
TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.