Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
BoE Inflation Report a Minor Setback for Roaring GBP-crosses

BoE Inflation Report a Minor Setback for Roaring GBP-crosses

Christopher Vecchio, CFA,

Talking Points:

- BoE downgrades inflation, GDP forecasts through 2017.

- GBPUSD back under $1.5700 after QIR.

- See the May forex seasonality report.

The British Pound has been on a tear since the (market-deemed) overwhelmingly positive UK general election results, now that any short-term uncertainty regarding the state of governance has been removed from the picture in its entirety. The Bank of England may see things differently, however, as the release of its Quarterly Inflation Report today put a damper on the Sterling's rally, thanks in part to a tone commensurate with one having been established before the election result was revealed.

The BoE's QIR was notably cautious, highlighted by the central bank's downgrades of its growth and inflation forecasts through 2017. Assuming that the BoE began its QIR assessment in earnest before the election results were revealed (rather than behaving like a university student cramming before a paper deadline), it's likely that the BoE was factoring in a divided political environment over the coming months as a reason the UK economy would be held back in 2015. However, now that the ruling Conservative Party has a clear mandate and outright majority in parliament, any short-term concern over the trajectory of fiscal policies are seemingly misplaced.

While the BoE's QIR may produce a catalyst for some short-term profit taking among weak speculators only in the market as a result of last week's general election result, there's little in the inflation outlook that would suggest that the Sterling rally is finished at these levels. Several GBP-crosses appear on the cusp of major moves higher, even if that takeoff is temporarily delayed thanks to central bank machinations.

See the above video for technical considerations in GBPUSD, GBPCAD, GBPNZD, and the USDOLLAR Index.

Read more: USDOLLAR Triangle Lingers as EUR/USD Breaks its ST Uptrend

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.