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Minutes Reveal BOE is Considering an Interest Rate Cut

Minutes Reveal BOE is Considering an Interest Rate Cut

Benjamin Spier, Technical Strategist

THE TAKEAWAY: BoE minutes reveal consideration for interest rate cut -> UK unemployment drops to 8.1% in May -> Cable falls on dovish tone

The Bank of England will consider cutting the interest rate after assessing the new lending and liquidity measures of the economy, this according to the minutes released from their July meeting. The minutes also revealed that the vote was 7-2 to increase stimulus by 50 billion Pounds. The minutes attributed the extra stimulus to worry over the Euro debt crisis. Last month the vote to keep the interest rate at 0.5% was unanimous.

Meanwhile, the United Kingdom produced mixed employment numbers in simultaneous releases. The 3-month unemployment rate slipped to 8.1% in May from 8.2%, the unemployment rate beat expectations for an unchanged rate. Meanwhile, the UK jobless claims rate rose 6,100 in June, more than the expected 5,000 jobless claims increase. May’s jobless claims were revised lower to 6.9 thousand from 8.1 thousand, according to the UK Office for National Statistics.

The UK unemployment rate set a new 9-month low as the Olympics likely created new jobs in London.

However, the lower unemployment rate did not stop the plunge in GBPUSD resulting from the dovish BoE minutes. Cable dropped from the 1.5639 support/resistance line, and currently is trading above the 1.5600 psychological support.

Minutes_Reveal_BOE_is_Considering_an_Interest_Rate_Cut__body_gbpusd.png, Minutes Reveal BOE is Considering an Interest Rate Cut

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