The Pound Sterling (GBP) strengthens against its major peers on Thursday after the Bank of England's (BoE) monetary policy announcement. The BoE left interest rates unchanged at 5%, as expected, as the United Kingdom (UK) core Consumer Price Index (CPI) data for August came in higher than expected.
Out of the nine Monetary Policy Committee (MPC) members, BoE external member Swati Dhingra seldom voted for cutting interest rates for the second consecutive time. The rest of the MPC supported keeping rates at their current levels. Investors were expecting that two MPC members would support a dovish policy decision.
Meanwhile, members unanimously voted to trim the holding of government bonds by 100 billion pounds over the coming 12 months.
The UK core inflation – which excludes volatile items – accelerated to 3.6%, higher than what markets expected. Services inflation, a closely watched indicator by BoE officials, rose sharply to 5.6% from 5.2% in July.
Currently, financial market participants expect that the BoE will cut interest rates one more time in any of its remaining monetary policy meetings.
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.08% | -0.22% | 1.02% | -0.27% | -0.64% | -0.34% | 0.52% | |
EUR | 0.08% | -0.15% | 1.10% | -0.18% | -0.54% | -0.26% | 0.60% | |
GBP | 0.22% | 0.15% | 1.26% | -0.04% | -0.41% | -0.11% | 0.74% | |
JPY | -1.02% | -1.10% | -1.26% | -1.26% | -1.64% | -1.37% | -0.51% | |
CAD | 0.27% | 0.18% | 0.04% | 1.26% | -0.37% | -0.07% | 0.78% | |
AUD | 0.64% | 0.54% | 0.41% | 1.64% | 0.37% | 0.30% | 1.14% | |
NZD | 0.34% | 0.26% | 0.11% | 1.37% | 0.07% | -0.30% | 0.86% | |
CHF | -0.52% | -0.60% | -0.74% | 0.51% | -0.78% | -1.14% | -0.86% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The Pound Sterling aims to capture 1.3300 against the US Dollar in European trading hours. The near-term outlook of the GBP/USD pair remains firm as it holds above the 20-day Exponential Moving Average (EMA) near 1.3100. Earlier, the Cable strengthened after recovering from a corrective move to near the trendline plotted from the December 28, 2023, high of 1.2828, from where it delivered a sharp increase after a breakout on August 21.
The 14-day Relative Strength Index (RSI) stands above 60.00. A fresh round of bullish momentum could occur if the oscillator sustains around this level.
Looking up, the Cable will face resistance near the August 27 high of 1.3266 and the psychological level of 1.3500. On the downside, the psychological level of 1.3000 emerges as crucial support.
The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.
Read more.Last release: Thu Sep 19, 2024 11:00
Frequency: Irregular
Actual: 5%
Consensus: 5%
Previous: 5%
Source: Bank of England
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