Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Final hours: unlock premium data with Claim 60% OFF
GBP/USD Slips to 6-Month Low After BoE Hold
www.investing.com/analysis/gbpusd-slips-to-6month-low-after-boe-hold-200642068
GBP/USD Slips to 6-Month Low After BoE Hold
By MarketPulse (Kenny Fisher) | Sep 22, 2023 02:02AM ET - Bank of England maintains interest rates
- Federal Reserve sends ‘higher for longer’ message to the markets
The British pound has posted losses on Thursday. In the North American session, GBP/USD is trading at 1.2287, down 0.46%. The pound fell as low as 1.2233 earlier but has pared some of the losses.
BoE Takes a Pause
The Bank of England ended a streak of 14 consecutive rate hikes on Thursday in a closely split decision. The Monetary Policy Committee voted 5-4 to maintain rates at 5.25%, with the four members voting to increase rates to 5.5%.
There was plenty of uncertainty ahead of the meeting, with the decision up in the air right to the wire. Early on Thursday, money markets were split 50-50 as to whether the BoE would pause or raise rates by a quarter-point, but the odds shifted to 60-40 in favor of a hike just one hour prior to the decision.
BoE policymakers had a tough decision on their hands, as raising rates would contribute to the battle against inflation but would also raise the likelihood of the UK economy tipping into a recession. In the end, a slim majority of MPC members voted to pause and we could very well see another close vote at the next meeting in the first week of November.
The BoE statement was cautiously optimistic about inflation. Policymakers noted that “CPI inflation is expected to fall significantly further in the near term” but also said that monetary policy would need to be higher and longer in order to reach the BoE’s 2% inflation target.
Fed Pauses but Lowers Rate Cut Forecast
The Federal Reserve held rates at Wednesday’s, maintaining the benchmark rate at 5.5%. The Fed delivered a ‘hawkish hold’, signaling that it planned to rates higher for longer. This message sent US stock markets lower and US Treasury yields higher on Wednesday, with the US dollar showing short-lived volatility against most of the majors following the decision.
The dot plot indicated that the Fed expects to raise rates once more before the end of the year and is projecting trimming rates by 50 basis points in 2024. In June, the dot plot indicated one more hike before the year’s end and rate cuts of 100 basis points. The Fed also sharply revised its growth forecast for 2023 to 2.1%, up from 1% in June, indicating that the Fed is confident it can guide the economy to a soft landing and avoid a recession.
GBP/USD Technical
- GBP/USD has pushed below support levels at 1.2325 and 1.2267
- There is resistance at 1.2436 and 1.2494
Related Articles
Week Ahead – Will the central bank bonanza kill the festive joy or...
By Trading Point - Dec 08, 2023
Fed, ECB, BoE and SNB hold their final policy decisions of the yearWill they push back on rate cut expectations?US CPI and flash PMIs will be crucial tooFed to hold rates but will...
Australian Dollar on a Roller-Coaster, US NFP Looms
By Kenny Fisher - Dec 08, 2023
Australian dollar steady after sharp gains on Thursday US nonfarm payrolls expected to climb to 180,000 The Australian dollar is trading quietly on Friday. In the European session,...
FX Daily: Yen Bulls Turn to US Payrolls
By Frantisek Taborsky - Dec 08, 2023
The big yen rally has been exacerbated by positioning factors, but markets may keep speculating on a BoJ December hike unless Japanese officials protest against hawkish bets before...
GBP/USD Slips to 6-Month Low After BoE Hold
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.