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GBP Price to Shrug Off UK Rate Decision, Brexit Still the Main Driver

GBP Price to Shrug Off UK Rate Decision, Brexit Still the Main Driver

Martin Essex, MSTA, Analyst

GBP price, news and analysis:

  • The Bank of England will likely keep its benchmark Bank Rate and its bond-buying programs unchanged today.
  • For traders, the key to future movements in GBP remains Brexit, and whether the UK leaves the EU with a deal or without one.

GBP price, UK interest rates and Brexit

The Bank of England’s monetary policy committee will likely vote unanimously, 9-0, to keep its benchmark Bank Rate unchanged at 0.75% today, its purchases of UK gilts (government bonds) at £435 billion and its buying of corporate bonds at £10 billion.

Traders in GBP are therefore unlikely to see any sharp movements on the announcement, although the meeting minutes will be scrutinized carefully for any hints of future changes to monetary policy. They will not be accompanied by either a press conference or by a quarterly Inflation Report.

Against this background, GBPUSD can be expected to continue its recent gentle recovery, with the longer-term outlook dependent on whether a Brexit deal can be reached between the UK and the EU, preventing the UK from leaving the bloc without a deal at 2300 GMT on March 29 next year.

GBPUSD Price Chart, 15-Minute Timeframe (December 11-20, 2018)

Latest GBPUSD price chart.

Chart by IG (You can click on it for a larger image)

UK data positive

In the meantime, UK economic data released this week have been broadly positive. Retail sales figures for November, published this session, showed sales well above expectations despite talk of a slowdown in pre-Christmas trading. Inflation numbers, published yesterday, showed another fall year/year and public sector borrowing data, due tomorrow, are predicted to show declines.

Normally, that would be positive for the GBP price but the figures are currently having less impact than usual because of the concerns about a possible hard Brexit.

More to read:

GBPUSD Price Edging Ahead Despite Growing Risk of No-Deal Brexit

Brexit Timeline - The Path Ahead

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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

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