The British pound today dropped significantly against the US dollar after the Bank of England left its monetary policy unchanged to the disappointment of many investors. The GBP/USD currency pair had initially rallied higher in the early European session despite the release of weak UK trade balance data in anticipation of the BoE rate decision.
The GBP/USD currency pair today dropped from a high of 1.3618 to a low of 1.3459 following the BoE decision.
The currency pair had dropped slightly in the late Asian session, but rallied higher in the early European session despite disappointing releases from the UK docket. The UK trade balance data released by the Office for National Statistics as well as the industrial production data for March both missed expectations. The manufacturing production report was slightly better than expected. However, it was the interest rate decision by the BoE’s Monetary Policy Committee that triggered the currency pair’s massive decline. The BoE maintained its bank rate at 0.50% and its asset purchase program at £435 billion.
The BoE’s May inflation report and Mark Carney‘s speech shattered investor expectations of a rate hike in the near future. The release of the weak US CPI data in the early American session had a muted impact on the currency pair. The positive initial jobless claims data released by the Department of Labor could have contributed to the pair’s decline.
The currency pair’s future performance is likely to be affected by political events in the UK, and tomorrow’s US consumer sentiment data.
The GBP/USD currency pair was trading at 1.3512 as at 17:29 GMT having dropped from a high of 1.3618. The GBP/JPY currency pair was trading at 147.75 having declined from a high of 149.30.
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