- The pound falls on all fronts after the decision of the Bank of England.
- The English central bank raised the rate to 1%, divisions are seen in the future among the members of the Committee.
- GBP/USD collapses and is one step away from marking new annual lows.
The pound tumbled after the Bank of England meeting and despite the rise in interest rates, pushing GBP/USD to a one-week low of 1.2421, coming within a few pips of marking new lows since June 2020. Hours ago, the pair had climbed to 1.2640.
EUR/GBP quickly climbed to five-week highs, reaching as high as 0.8500, close to May’s peak of 0.8511.
The BoE raised the benchmark interest rate by 25 basis points as expected. While three members of the Monetary Policy Committee called for a 50 basis point hike, two other members did not share the central bank’s view that further interest rate hikes will be necessary given the expected economic outlook. Among the projections, the BoE sees higher inflation ahead and lower growth, with warnings of risks of a recession.
Regarding the purchase program, the BoE will announce in August how it will proceed to sell the public securities it has in its possession. In September the sale of corporate bonds would begin.
The pound had a sharp drop in the market and at the same time the dollar accelerated the rebound after the recent crash, following the decision of the Federal Reserve on Wednesday.
Technical levels
Source: Fx Street
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