The GBP/USD price wavered after the Bank of England (BOE) made its second interest rate decision of the year. It rose to 1.400, which was slightly higher than this week’s low of 1.3811.
Bank of England decision
The BOE concluded its two-day monetary meeting and did what most analysts were expecting. The bank’s monetary policy committee (MPC) voted unanimously to maintain interest rates at 0.1%.
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It also left the target of its quantitative easing program at 875 billion pounds. It also maintained its corporate bond purchases program intact. In it it is buying investment-grade corporate bonds worth 20 billion pounds in a bid to stabilise the corporate sector.
In the statement, the bank said that it expects consumer inflation to rise to 2% in spring this year. It also said that it expects that the UK economy will recover faster than expected because of the faster roll-out of the vaccine. It also expects the unemployment rate to remain relatively stable because of the extension of the government’s furlough program. It said:
“The news in recent plans for the easing of restrictions on activity may be consistent with a slightly stronger outlook for consumption growth in 2021 Q2 than was anticipated in the February Report, although it is less clear that this represents news to the MPC’s medium-term forecast.”
The GBP/USD is also reacting to the Fed interest rate decision that came out yesterday. As was predicted, the bank left interest rates and QE intact and warned that the easy money policies will likely remain in the near term.
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GBP/USD technical outlook
The GBP/USD pair rose to an intraday high of 1.4016. On the four-hour chart, the price is between the support and resistance levels of 1.3780 and 1.4016. It is also slightly above the 25-period, 15-period moving averages, and the Ichimoku cloud. Therefore, the pair will likely have a pullback as bearish forex traders attempt to push it to the lower side of the channel. However, a break above the important resistance at 1.4015 will invalidate this trend.
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