GBP/USD Consolidates After BOE Keeps Rates On Hold
Summary
- Rates on hold at 0.75% as expected.
- No-deal Brexit would result in slower GDP growth.
- Inside bars on GBP/USD daily chart.
On Thursday the Bank of England (BOE) kept rates on hold at 0.75% as expected. The decision came on the heels of yesterday’s quarter-point rate cut from the Federal Reserve. Sterling is trading modestly higher on the news.
BoE policymakers warned that a no-deal Brexit would result in slower GDP growth, higher inflation and a weaker pound. The policy minutes also suggested that the uncertainty caused by delaying Brexit would harm the economy.
Referencing the US/China trade war the minutes stated: “Since the MPC’s previous meeting, the trade war between the United States and China has intensified, and the outlook for global growth has weakened.”
United Kingdom Prime Minister Boris Johnson has made clear his intent for Britain to leave the European Union by the October 31st deadline, with or without a deal. However, in early September Parliament voted to pass a law that would force Johnson to request a three-month delay to Brexit if a deal with the EU has not been reached.
Looking at the GBP/USD daily chart we can see that price is currently consolidating within the range of the candle formed on Tuesday, when price reached the highest levels in almost two months.
Dan Blystone, Senior Market Analyst at Scandinavian Capital Markets.
Scandinavian Capital Markets is a Prime STP-ECN Forex Broker. It is built on extensive knowledge of the foreign exchange market, expertise in technology, and a commitment to create trusted long-term relationships with their trading partners.
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