GBP Tears Higher versus USD as Bank of England Leaves Rates Unchanged
The GBP is one of the top performers on the last day, posting steep gains versus the greenback and other majors. Precisely, the Pound stretched versus the Yen and the AUD. The latter is particularly weak following the RBA announcements that it will leave rates unchanged and increase bond purchases, looking to ignite inflation and wage growth. On the other hand, the BoE, like the FED, left their interest rates and QE unchanged at 0.10 percent and 5 billion, respectively.
Investors and traders were anxious to hear from the MPC, searching for guidance. Despite the situation around Brexit and how terse UK's relations have been with the Eurozone—the recent spat being with AstraZeneca, economic data mostly surprised to the upside. The good news is that the UK is leading in vaccinating citizens. Soon—according to Boris Johnson, they may lift some contagion restrictions. This partly explains why the Pound has been firm, rewinding losses versus the USD and Yen. Still, this is not saying the economy has been strong. The UK Composite PMI index, for instance, contracted in January 2021.
Impact on the GBP:
Bullish. Their UK's small wins against Coronavirus and hopes of restriction lift-offs combine to boost the GBP that's now resuming its uptrend versus the USD. From the BoE, the UK's GDP will expand by Q4 2021, and Coronavirus's effects won't be as bad as it was in Q2 2020.
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