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GBP/USD Rallies to Fresh Highs as BoE Votes 9-0 against More QE

GBP/USD Rallies to Fresh Highs as BoE Votes 9-0 against More QE

2013-09-18 09:05:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- MPC votes 9-0 against more QE.

- MPC votes 9-0 on keeping main rate on hold at 0.50%.

- Improving UK economy has policymakers in “wait-and-see” mode.

= GBPUSD BULLISH

The British Pound has rallied to take top spot among the majors this morning after the Bank of England’s September meeting Minutes showed a shift in policymakers’ outlook on the UK economy. Of note, policymakers said that incoming August data presented an upside risk to the central bank’s economic growth forecasts (a sign that they feel the UK economy is improving faster than anticipated).

Overall, it appears that the BoE is ‘buying into’ the idea that the UK economy is in the early stages of a sustainable recovery; and therefore, no additional easing is required in the near-term to check down rising interest rates. Indeed, the BoE voted 9-0 against additional bond purchases (more QE); and simultaneously cast a more or less symbolic 9-0 vote against changing the main interest rate.

Read more: Bank of England Minutes to Provide Pre-FOMC Volatility

GBPUSD 1-minute Chart: September 18, 2013

GBPUSD_Rallies_to_Fresh_Highs_as_BoE_Votes_9-0_against_More_QE_body_x0000_i1027.png, GBP/USD Rallies to Fresh Highs as BoE Votes 9-0 against More QE

Charts Created using Marketscopeprepared by Christopher Vecchio

Following the release, the GBPUSD rallied from $1.5929 to as high as 1.5958, a fresh session high and just short of the monthly high set last week at 1.5965. The pair had eased slightly to 1.5950, but as noted in the DailyFX Real Time News feed, there is evidence that the British Pound may be working on a more considerable move against the Swiss Franc and the US Dollar (bullish GBPCHF and GBPUSD).

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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