The Bank of England did not raise rates from 0.1% on Thursday, as it handed down its monetary policy decision, with two officials dissenting in favor of rate hikes, while the Quantitative Easing program stayed at £895 billion.
The bank talked the talk but eventually did not walk the walk regarding rates and drew criticism for not pulling the trigger, in a backdrop of heightened market bets for hikes, partly created by recent hawkish commentary from some members such as its Governor.
This caused GBP/USD to plunge and post its worst day of the year on Thursday, while the pound could not find solace in the policy statement reference that "…it would be necessary over coming months to increase Bank Rate in order to return CPI inflation sustainably to the 2% target". .
From a technical prospective, the move is overextended and as the pair finds some reprieve, a rebound towards the mid-1.3500 area would be reasonable. Anything beyond that though, would probably need a catalyst and important technical level lie ahead, with the first being the EMA100 above 1.3600.
The risk is on the downside however and yesterday's collapse has exposed the GBP to its 2021 lows form September (1.3411), but it is probably too early for a breach. In any case the pair's trajectory may be dictated by today's US NFPs.
Past Performance: Past Performance is not an indicator of future results.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 05 Nov 2021 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2021/november-2021