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Breaking: Bank of England Tapers QE, GBP/USD Jumps

Breaking: Bank of England Tapers QE, GBP/USD Jumps

Justin McQueen, Strategist

GBP/USD, BOE Price Analysis & News

  • BoE Tapers QE Purchases to GBP 3.4bln from 4.4bln, GBP Rises
  • BoE Leaves Bank & APF Unchanged As Expected
  • BoE Upgrades Growth, Inflation and Unemployment Forecasts

MONETARY POLICY: As widely expected the Bank of England maintained current monetary policy in a 9-0 vote with the interest rate left at 0.1%, however, the there had been an 8-1 vote split for leaving APF at GBP 895bln, with Haldane calling for the APF increase of GBP 150bln to be cut to GBP 100bln (BoE have currently used up GBP 70bln). Although, it is worth keeping in mind that while Haldane is the most hawkish member on the MPC, he will be leaving after the June meeting and thus this shift is not significant in the longer term.

QE PURCHASES: In what was a 50/50 decision, the BoE announced that they will slow the pace of weekly asset purchases to GBP 3.4bln from the previous rate of GBP 4.4bln, which would allow the BoE to hit its APF target by the end of this year. That said, the BoE stressed that this should not be taken as a shift in monetary policy stance and instead be looked at as an operational decision. As we had highlighted would be the case in our preview.

MPC ECONOMIC PROJECTIONS:

Breaking: Bank of England Tapers QE, GBP/USD Jumps

GBP/USD, EUR/GBP, UK 10 YEAR YIELD REACTION

Breaking: Bank of England Tapers QE, GBP/USD Jumps

Source: Refinitiv

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