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August 05, 2021 @ 16:18 +03:00
At today’s meeting, the Bank of England kept all the key monetary policy parameters unchanged, leaving the Bank Rate at 0.1% and QE at £895 Billion. However, the BoE has indicated a shift towards monetary policy tightening. Michael Saunders voted to cut QE to £850 Billion.
It may be considered as a bold hint that such changes may follow soon. In the previous two meetings, the idea of reducing purchases was supported by Chief economist Andrew Haldane, who has left BoE now.
In a commentary to the Decision, the MPC Committee said that despite the transitionary nature of current inflation, the rapid recovery of the economy and the removal of the Covid restrictions create suitable conditions for a rate hike in the medium term.
Such news is rather good for the Pound as the Bank of England increasingly opens the door before QE is phased out and moves into a rate hike cycle.
However, it is unlikely that the BoE will jump-start ahead of the Fed. This explains the modest upward dynamics of the GBPUSD and the continued wandering of EURGBP around 0.8500.
The FxPro Analyst Team