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.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Breaking news

Federal Reserve Announce $2.3 Trillion in Loans to Support Economy

Real Time News
  • Natural Gas Price Chart Exposes Bearish Signals - Nat Gas Forecast More details in the link below: https://www.dailyfx.com/forex/technical/article/special_report/2020/04/09/Natural-Gas-Price-Chart-Exposes-Bearish-Signals-Nat-Gas-Forecast-MK.html?CHID=9&QPID=917714 https://t.co/Gc2vdB14ha
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.24% 🇳🇿NZD: 1.01% 🇪🇺EUR: 0.66% 🇨🇦CAD: 0.55% 🇨🇭CHF: 0.50% 🇯🇵JPY: 0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ezlPWmoQsv
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Germany 30: 2.32% Wall Street: 2.04% US 500: 1.98% France 40: 1.72% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/oxdKK48tbV
  • New York Fed Purchases $14 B in Treasury Coupons
  • Democrats in the Senate block $250 billion small business stimulus plan $SPX
  • Oil on a roll...Brent =6.5% at $36.50/bbl...#oott #brent @DailyFX https://t.co/PzgnGu27p6
  • RT @lampidicsparrow: 20mbpd https://t.co/M05rMBbPAK
  • Hey traders! We are yet again back with a daily market update with @DailyFX Chief Strategist, @JohnKicklighter he answers if we are heading into a recession and what are the key market 📈 information to look out for today and the weekend. https://t.co/kYxCym8rxf
  • OPEC+ and other are to discuss cuts as big as 20mbpd, according to on Russian source #OOTT
  • Fed Chair Powell: - Will only scale back support when economy is recovering $SPX
GBPUSD whipsaws as MPC leave rates unchanged and signal economic recovery

GBPUSD whipsaws as MPC leave rates unchanged and signal economic recovery

2019-12-19 12:30:00
Daniela Sabin Hathorn, Analyst
Share:

Talking Points:

  • MPC members leave rates unchanged and point to signs of global economic recovery
  • GBPUSD spiked higher but quickly corrected back to pre-announcement levels
  • The Queen’s speech is underway and key focus will be on Brexit updates

GBPUSD saw some swings in the morning session ahead of a packed day for sterling, with focus on retail figures, BoE rate decision and the Queen’s speech. Cable prices rose 0.4% in the early hours of trading before hesitantly falling back in line with the opening level, before bouncing back to above 1.3130 in reaction to the BoE’s Monetary Policy Committee leaving rates unchanged at 0.75% and signalling towards a recovery in global growth.

But the pair quickly corrected and fell back in line with the 20-day moving average around 1.3093 as the pair continues its range trading heading in to the low volume end of year period.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Daniela Sabin Hathorn
Improve your trading with IG Client Sentiment Data
Get My Guide

GBPUSD 1-minute chart: price reaction to BoE rate decision

GBPUSD whipsaws as MPC leave rates unchanged and signal economic recovery

MPC monetary decision

The key takeaways from the latest meeting are that the split between members remained as 7-2 as they focus on the next round of Brexit negotiations. They mentioned that they were unable to yet measure the impact of the election result on the economy, given that no hard data has been published since then. The material impact on economic data will not be measurable until December and January figures are published in the new year, which means the MPC is likely to remain neutral until the end of the first quarter if no significant unexpected changes take place.

Regarding economic growth, they pointed out that global growth has shown signs of stabilising with global financial conditions remaining supportive. But the labour market is showing signs of loosening, albeit remaining tight. Given an expected drop in inflation in the first half of 2020, the committee concluded that monetary policy could respond in either direction to changes in the economic outlook to ensure a sustainable return of inflation to the 2% target.

GBP Forecast
GBP Forecast
Recommended by Daniela Sabin Hathorn
Download our fresh Sterling Forecast
Get My Guide

Latest figures

Inflation figures released on Wednesday showed that consumer prices remained stable in November, with the CPI figure coming in unchanged at 1.5%, above expectations of 1.4%, but core inflation fell 0.1% brining the annual figure down to 1.1% from 1.4% in the previous month.

November retail sales figures released earlier this morning provided another slump in economic data for the UK, with much worse readings than expected across the board. Core retail sales fell by 0.6% in the month of November, bringing the yearly figure down to 0.8% from 2.7% in the previous month. The reading for the month of December will be a figure to watch out for, signalling to consumer sentiment after the election outcome and possible end to the Brexit uncertainty, especially given the expected rise in spending during the holiday period.

Queen’s speech

After the result of the general election last week, the Queen attended parliament today to give her traditional speech when introducing a new government, which will set out their planned agenda. The event started at 1130 GMT, but it is expected to continue throughout the afternoon as more than 20 bills will be announced. Key focus will be on news regarding the government’s updated plan on Brexit, given Boris Johnson’s stance on not extending the transition period regardless of the state of trade deal negotiations.

--- Written by Daniela Sabin Hathorn, Junior Analyst

To contact Daniela, email her at Daniela.Sabin@ig.com

Follow Daniela on Twitter @HathornSabin

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

DISCLOSURES

News & Analysis at your fingertips.