As traders widely expected, Bank of England raised interests from 0.50% to 0.75% after nine years.
The decision was unanimous and came after a decade following the financial crisis. The unanimity of the vote was a fact that surprised experts. However, ‘The Old Lady of Threadneedle Street’ signalled no rush for the next hike ahead of Brexit.
The economy strength and the uncertainty linked to the Brexit remain the most contentious issues.
Further, ongoing concerns about Brexit and economic weakness could keep GBPUSD from climbing above the psychologically-important 1.32 level.
FED’ s decision on interest rates
FED (FOMC) held interest rates unchanged on Wednesday, after concluding its two-day policy meeting, as expected. Nevertheless, the decision paved the way for a September hike.
Analysts support the meeting was mostly unexciting although FED was more positive on the economy, characterizing it as “growing”.
Forex Market: Sterling following interest rate hike by the Bank of England
The US-China trade dispute escalation and FED’ s view that U.S. economy is growing led to buy into the greenback. The tit-for-tat tariffs put pressure on currencies vulnerable to a worsening trade conflict, such as the Aussie.
The Dollar inched up 0.3% against its major traded rivals, while it dropped 0.1% against the Yen.
The Australian Dollar, which is often seen as a liquid proxy of China-related trades, dropped 0.4%.
The Euro dropped 0.4% to a 2-week low against the greenback following the pressure caused by the US Dollar strengthening.
The Sterling inched up slightly (0.1%) on Thursday following the BoE policy meeting decision to raise interest rates.
Oil prices headed lower for a third day as US crude inventories rose unexpectedly. Brent has dropped 33 cents while crude dropped 55 cents.
Gold prices edged down 0.11% for a fourth straight day due to a weakening global trend, following greenback’.
Sources: Reuters, CNN money, the guardian
PLEASE NOTE The information above is not investment advice.