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.

0

Notifications

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

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Heads Up:🇦🇺 Ai Group Services Index (APR) due at 22:30 GMT (15min) Previous: 58.7 https://www.dailyfx.com/economic-calendar#2021-05-06
  • The US Dollar is still struggling against most ASEAN currencies. USD/SGD remains downside-focused despite recent gains. USD/THB is eyeing a triangle. USD/IDR and USD/PHP may point lower. Get your market update from @ddubrovskyFX here:https://t.co/6Nvvmz8h6d https://t.co/dX69A341oc
  • US Dollar Outlook: USD/CAD Volatility to Rise, Jobs Data Looms -via @DailyFX Link to Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2021/05/06/us-dollar-outlook-usd-cad-volatility-to-rise-jobs-data-looms.html #NFP $DXY $USDCAD https://t.co/OIYZ2YXxLK
  • Heads Up:🇺🇸 Fed Kaplan Speech due at 22:05 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-05-06
  • The Federal Reserve discussed the vulnerability of asset prices should appetite change. Get your market update here: https://t.co/0nAEKEX1eh https://t.co/BD24UcDeyT
  • EUR/USD stronger amid broad USD weakness on Thursday $EURUSD https://t.co/h042KoSyuA
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.98% 🇨🇭CHF: 0.60% 🇦🇺AUD: 0.49% 🇳🇿NZD: 0.26% 🇯🇵JPY: 0.11% 🇬🇧GBP: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/4u2cNfSmLn
  • RT @BrendanFaganFx: Federal Reserve Hints at Potential Declines in Asset Prices, Calls for Hedge Fund Transparency #Fed #FederalReserve #F…
  • Both EUR/JPY and EUR/USD are hovering near multi-year downtrend downtrends, while EUR/GBP may still have more room to the topside. Get your $EUR market update from @CVecchioFX here:https://t.co/2SYCKwz8hz https://t.co/tj6UQUDzRL
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Silver: 3.18% Gold: 1.61% Oil - US Crude: 0.31% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/mo9LS3teJl
GBP/USD Plunges on BoE Rate Cut and More QE, Growth Outlook Slashed

GBP/USD Plunges on BoE Rate Cut and More QE, Growth Outlook Slashed

Oded Shimoni, Christopher Vecchio, CFA,

Talking Points:

- The British Pound plunged versus other major currencies post-BOE.

- BOE cut rate to 0.25% by a unanimous decision - scope for further cuts too.

- Asset Purchase Facility (the BOE’s QE programme) increased to £435b on a split decision

The British Pound plunged versus other major currencies after today’s Bank of England (BOE) rate decision saw the bank rate cut to record lows at 0.25%, as was expected by economists.

The Monetary Policy Committee (MPC) voted unanimously to cut the main rate to 0.25%.

The MPC voted by a split decision to boost the Asset Purchase Facility (the BOE’s QE programme) for a total of £435b from the prior £375b.

The bank also announced the purchase of up to £10 billion of UK corporate bonds in the next 18 months, and new "Term Funding Scheme" to reinforce the pass-through of the cut in the bank rate.

The BOE said that those measures will be financed by issuance of the central bank reserves.

Eight members supported the introduction of a corporate bond scheme (Forbes was against); six members supported further purchases of UK government bonds (Weale, Mccafferty and Forbes were against).

The MPC emphasized they can do more if needed, including further cuts to the key rate.

With the rate cut decision highly expected (the market basically priced in a 100% probability of a cut), attention quickly turned to the other elements in the statement and the Quarterly inflation report.

Contrary to the anticipated rate cut, expectations were only slightly tilted for a hold on a boost to the Asset Purchase Facility. As we mentioned today, this was likely to catch some participants on the wrong side, as it seems the QE addition was perhaps more than the market anticipated.

The other major element of the announcement was the revisions to inflation and growth outlook. The inflation report revealed that the central bank cut its growth forecast for 2017 to 0.8% from the prior 2.3%, while 2018 growth is now seen at 1.8% from 2.3%, on the backdrop of estimated weaker investment and consumption due to Brexit.

The BOE forecast only 0.1% expansion this quarter and left the 2016 number unchanged at 2.0%. This indicates that the central bank do not see a recession on the horizon due to their new measures.

Inflation is forecasted to reach the bank’s 2% target in Q4’17 versus Q2'18 prior, as the weaker Sterling on the Brexit vote adds to inflationary pressures.

Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 58.3% of traders are long the GBP/USD at the time of writing as traders flipped net long on the drop, apparently trying to pick a bottom. The SSI is mainly used as a contrarian indicator implying further weakness ahead.

You can find more info about the DailyFX SSI indicator here.

Chart 1: GBP/USD 5-Minute Chart (Intraday August 4, 2016)

GBP/USD Plunges on BoE Rate Cut and More QE, Growth Outlook Slashed

--- Written by Oded Shimoni, Junior Currency Analyst; Video produced by Christopher Vecchio, Currency Strategist

To contact Oded Shimoni, e-mail oshimoni@dailyfx.com

Follow him on Twitter at @OdedShimoni

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

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.

DISCLOSURES