The Bank of England Minutes from May 8-9 meeting prompted a pronounced British Pound advance versus the US dollar. The fundamental developments coming out of the U.K. raise the prospect for a stronger economic recovery.
Headlines from the BOE Minutes are as follows.
- Rate decision becoming ‘more balanced’ for some MPC. Key Rate likely to rise only gradually.
- Low rates increase risk of financial imbalances.
- There has been ‘modest tightening’ in monetary conditions.
- Inflation moving closer to 2% in coming months. British Pound strength to put downward pressure on CPI
- MPC has range of views on company, labor slack
- Looking through temporary impact of FX rate
- Risks from Ukraine tensions and China credit growth.
The British Pound rallied following the release of the minutes, and currently faces resistance. “A resistance zone is seen at 1.6870-1.6902,” says DailyFX Strategist Jamie Saettele, “a break of the line that extends off the November and February lows is needed to more confidently signal that a top is in place.”
GBP/USD Daily Chart from GBP/USD Retraces Half of Decline; Don’t Forget about 1.6902.
Chart Prepared by Jamie Saettele, CMT using FXCM Marketscope 2.0
-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to instructor@dailyfx.com.
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