Worldwide macro summary for 16/06/2017: The Bank of England decided to leave the interest rate the same at the level of 0.25% as expected, however MPC vote was a surprise. The Monetary Policy Committee was expected to vote 7-1 as usual, but the vote was 5-3 as 2 more policy members, Saunders and McCafferty, sign up with Forbes in requiring a rate walking. The asset purchase targets were the same: prior possession purchase target was 435billion and prior corporate bond purchase target was 1billion.
In the Monetary Policy Summary we can check out that all MPC agree any rate increase should be progressive and restricted. The CPI inflation might exceed 3% by autumn 2017 and the sterling’s fall given that the May inflation report will add to this if fall is sustained. The BoE’s tolerance of the above-target CPI is being eroded as strong employment growth might suggest spare capacity. The UK wage development remains weak even relative to historic standards, so it can further slow the customer costs. At the end, the BoE revised Q1 GDP growth to +0.3%, and Q2 to +0.4%.
In conclusion, market individual were shocked by the ballot outcomes (there hasn’t been a split like 5-3 considering that 2011) and hawkish tone of the policy summary. There was a talk of more QE or a rate trek in the future, but the BoE is headed in the other direction despite political uncertainty. The Brexit negotiations will begin on Monday, 19th of June. It appears like the BoE is seeing things in a different way than the markets and isn’t really sure what’s occurring in the economy or exactly what will be the result of the settlements, even if it will agree with for the UK.
Let’s now take a look at the GBP/USD technical image on the H4 timeframe. The cable leapt right after the press release, however then slowly gave up all the gains. Presently, it is trading in the middle of the range in a sideways cost action pattern. The next technical resistance is seen at the level of 1.2818 and the next support lies at 1.2690.
The product has been supplied by InstaForex Business – www.instaforex.com