Talking Points:
- MPC members leave rates unchanged and point to signs of global economic recovery
- GBPUSD[1] spiked higher but quickly corrected back to pre-announcement levels
- The Queen’s speech is underway and key focus will be on Brexit updates
GBPUSD saw some swings in the morning session ahead of a packed day for sterling, with focus on retail figures, BoE rate decision and the Queen’s speech. Cable prices rose 0.4% in the early hours of trading before hesitantly falling back in line with the opening level, before bouncing back to above 1.3130 in reaction to the BoE’s Monetary Policy Committee leaving rates unchanged at 0.75% and signalling towards a recovery in global growth.
But the pair quickly corrected and fell back in line with the 20-day moving average around 1.3093 as the pair continues its range trading heading in to the low volume end of year period.
GBPUSD 1-minute chart: price reaction to BoE rate decision
MPC monetary decision
The key takeaways from the latest meeting are that the split between members remained as 7-2 as they focus on the next round of Brexit negotiations. They mentioned that they were unable to yet measure the impact of the election result on the economy, given that no hard data has been published since then. The material impact on economic data will not be measurable until December and January figures are published in the new year, which means the MPC is likely to remain neutral until the end of the first quarter if no significant unexpected changes take place.
Regarding economic growth, they pointed out that global growth has shown signs of stabilising with global financial conditions remaining supportive. But the labour market is showing signs of loosening, albeit remaining tight. Given an expected drop in
