- GBP/USD trades near the highest level since early March
- The policy announcements were in line with expectations
- BOE’s economic expectations are slightly optimistic than earlier
BOE policy announcements were line with expectations of no change in policy rates; also, there were no indications regarding the extension of quantitative easing or any immediate move towards negative interest rates. QE extension and inclination for negative-interest would have been negative for the Sterling; GBP/USD rallied immediately after the announcement.
In March, the central bank had cut key interest rate to 0.10 Percent and added 200 billion pounds in its QE program – now at 645 billion pounds.
Analysts had expected that the BOE would consider the recent economic improvements to keep the status quo in its policy announcements. Governor Bailey’s press conference and the economic projections from the bank wouldn’t throw any positive surprise in terms of the near-term direction of the economy, analysts agree.
Before the BOE, the Cable showed mild gains of 0.12 Percent today after a two-day increase to 1.3130. It was trading near the highest level since March, posted on Friday, heading into the UK trading. The bears would have made some impression today if the pair had failed to cross the resistance at 1.3170, part of a downward sloping trend line since January 31, 2020; the RSI was also in overbought range.
With BOE pressure off its shoulders, if bulls continue the momentum, GBP/USD might target December 31, 2019 peak of 1.3285 after crossing psychologically important 1.3200 and late-January top of 1.3210.