The Bank of England left the rates unchanged and expects further tightening of the policy. Brexit remains the main obstacle
Today, the key event for the British pound was the decision of the Bank of England on interest rates, which is expected to remain unchanged. However, there was no change in the GBP/USD pair, which continued to trade through the weekly highs on this decision.
The comments of the UK regulator also had no effect and had no impact on the markets, as they were quite predictable and justified.
According to the minutes of the Bank of England meeting, the key interest rate remained unchanged at the level of 0.75%. It should be noted that the number of votes for retaining the key rate unchanged was 9 versus 0, which indicates a unified view of the Bank of England’s representatives on the future policy. None of the votes was given for raising or lowering the interest rate.
The Bank of England’s planned asset purchases also remained unchanged.
Judging by the statements made after the publication of the interest rate decision, the regulator expects further tightening of the policy to return to the target inflation rate of 2%.
It is worth noting that the current economic dynamics in the UK, corresponds to the August forecasts, which allows you not to delay increasing interest rates. The only problem is the Brexit situation. The Bank of England is also concerned about the situation in the financial markets, which signals even greater uncertainty about Brexit.
The Central Bank is also confident that the risks to world economic growth have increased, as measures to trade between the US and China will have a negative impact along with trade disagreements with Canada.
The British pound began to lose its positions won at the beginning of the European session after a statement was made that further increases in interest rates are likely to be gradual and limited.
From all that has been said, we can conclude that the Bank of England does not intend to hurry up with the tightening of the policy, although for this there are all grounds. The main problem remains the situation with Brexit, whose solution will allow the regulator to build longer-term plans and consider the monetary policy course in a completely different direction.
As for the technical picture of the GBP/USD pair, the buyers still need a breakthrough of the large resistance at 1.3080, only above this will be possible to speak with confidence about the formation of a new upward movement with the update of the highs in areas of 1.3170 and 1.3260.