Skip to Content
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. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
GBP/USD Drops as BoE Disappoints Calls for Hawkish Surprise

GBP/USD Drops as BoE Disappoints Calls for Hawkish Surprise

GBP/USD, BOE Price Analysis & News

  • GBP Bulls Disappointed on 8-1 Vote Split
  • BoE Stick to Transitory Inflation Narrative
  • BoE Pushback Against Early Tightening Calls

BOTTOM LINE: As widely expected the Bank of England maintained current monetary policy in a 9-0 vote with the interest rate left at 0.1%. Once again, Andy Haldane, was the only hawkish dissenter on QE, voting to cut the APF target by GBP 50bln. As a reminder, Haldane will leave his post as Chief Economist after this meeting. As such, given that markets had been positioned for a hawkish surprise, following the recent FOMC meeting with reports doing the rounds that the BoE should scrap QE (The Time Shadow MPC) adding to the crowded long GBP, an 8-1 vote split of QE was subsequently a disappointment for GBP bulls, prompting cable to fall to session lows.

GROWTH: Bank staffs upgraded the level of Q2 GDP by around 1.5ppts since the May report and thus output in June is expected to be around 2.5% below its pre-Covid level. This is largely a reflection of the recent swathes of firm data since the May meeting.

INFLATION: In light of inflation rising above the BoE’s target sooner than expected, the BoE now see inflation likely exceeding 3% (previously saw a peak of 2.5%) for a “temporary” period.

MONETARY POLICY: While central bank’s have begun to shift in a more hawkish manner (most notably the FOMC), the BoE highlighted that policy should lean strongly against downside risks to the outlook and ensure that the recovery was not undermined by a “premature tightening in monetary conditions”. The BoE pushing back against the view that the Bank could look to tighten policy sooner rather than later.

MPC BALANCE: As the only hawk leaves the BoE having failed to convince other members to join his hawkish dissent, focus will begin to grow on the balance of the BoE going forward and at this present time, a replacement has not been announced for Haldane.

GBP/USD Chart: 30-Minute

Source: Refinitiv

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Justin McQueen
Trading Forex News: The Strategy
Get My Guide

Find Out More on Trading GBP/USD With Our Comprehensive Guide

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

DISCLOSURES