GBP/USD PRICE ANALYSIS: POUND STERLING RISES AFTER BANK OF ENGLAND EMERGENCY RATE CUT & INCREASE IN BOND PURCHASE PROGRAM TO OFFSET CORONAVIRUS
- Spot GBP/USD price action extended intraday gains after the BoE announced an emergency interest rate cut
- The Bank of England also decided to accelerate its bond purchase program by £200 billion
- The Pound Sterling crashed 5% against the US Dollar during the prior trading session
Following suit of several other central banks, the Bank of England (BoE) just announced an emergency interest rate cut. The BOE policy interest rate was lowered by 15-basis points from 0.25% to 0.10%. The Bank of England also decided to resume quantitative easing – an unconventional monetary policy tool adopted during the global financial crisis used to stimulate the economy and loosen financial conditions.
A unanimous BoE agreed to increase its holdings of UK government bonds and sterling non-financial investment grade corporate debt by £200 billion to a total of £645 billion. The Pound Sterling (GBP) responded positively to the news while UK Gilts gained ground.
GBP/USD PRICE CHART: 15-MINUTE TIME FRAME (18 MARCH 2020 TO 19 MARCH 2020)
Along with several other major currency pairs, GBP/USD has hemorrhaged as of late with the Pound Sterling succumbing to US Dollar strength.
A rebound attempt by the Pound Sterling so far today, which extended higher immediately after the emergency BoE decision, is attempting to erase the 5% plunge recorded by GBP/USD price action during the prior trading session.
-- Written by Rich Dvorak, Junior Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
