BoE Keeps Interest Rate and Asset Purchase Target Unchanged
THE TAKEAWAY: BoE keeps interest rate and asset purchase target unchanged -> bank says keeping QE under review -> Sterling trading steady
The Bank of England met economists’ expectations, and therefore traders’ expectations, by keeping the UK interest rate unchanged at 0.50% and not changing the 375 billion Pound asset purchase target during their August meeting.
The bank’s decision comes only a week after the UK GDP for 2Q was reported 0.7% lower, the third straight quarter of economic contraction.
The BoE said they will keep the quantitative program under review, meaning they will reconsider raising their asset purchase target in a future meeting. However, the bank’s new funding for lending scheme was only opened yesterday and they had just increased their asset purchase program last month, and the BoE said they will consider further monetary action after seeing the results of those measures.
The BoE’s decision was not surprising and Sterling trading did not significantly change following the Bank’s release. Over the past few hours, GBPUSD has recovered a few of the points lost following yesterday’s FOMC meeting. 1.5475 has provided support for a month-long GBPUSD range and 1.5750 has provided resistance.
Further volatility could be expected following the upcoming ECB decision.
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