On Thursday the BOE announced that the Bank's Monetary Policy Committee (MPC) had voted unanimously to maintain the interest rate at the current level of 0.75 per cent.
The expected final decision came as no surprise in a busy week filled with central banks deliberations. Overall, the MPC asserted that the British economy was developing according to earlier projections, excluding a recently emerged downside risk to growth.
“The MPC’s most recent economic projections, set out in the May Inflation Report, assumed a smooth adjustment to the average of a range of possible outcomes for the United Kingdom’s eventual trading relationship with the European Union and were conditioned on a path for Bank Rate that rose to around 1% by the end of the forecast period. […] Since the Committee’s previous meeting, the near-term data have been broadly in line with the May Report, but downside risks to growth have increased.” [source]
These remarks by the MPC seem to suggest that the BOE is confident about the UK’s secured role as a trading partner of the EU after its eventual departure from the bloc, despite the well-known Eurosceptic Boris Johnson being the most likely successor of Theresa May as Britain's next Prime Minister. Johnson has said on several occasions that he is more than content to deliver Brexit even without a trade deal.
Despite the political uncertainties in the country, the economic prospects for growth seem to have reassured investors for the time being, as the consumer confidence index has been gradually increasing since the beginning of the year.
Image source: TradingEconomics.com
Overall, the pound reacted positively to the more or less upbeat statement of the BOE, and the GBPUSD pair jumped with 0.49% on Thursday after gaining another 0.68% the day before, following the FED's interest rate decision. However, the pair found strong resistance at 1.27184, and during Friday's trading session the GBP/USD decreased with 0.39% (as of 1.30 pm CET).
Image source: Trendsharks ©, created with TradingView.com
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