Sterling Rallies on USD Weakness, Falls on Dovish BoE Decision

The British pound today fell from its daily highs in the mid-London session following the dovish outlook painted by the Bank of England following its rate decision. The GBP/USD currency pair had rallied to its daily highs earlier in the session by riding on the wave of broad US dollar weakness following yesterday’s dovish FOMC statement.
The GBP/USD currency pair today rallied from an opening low of 1.2651 to a high of 1.2727 in the mid-London session before retracing most of its gains.
The currency pair opened today’s session with a bullish bias and rallied for most of the Asian session and into the London session. The pair fell slightly after the release of the mixed UK retail sales data for May by the Office for National Statistics. The headline retail sales print contracted by 0.5% as expected, while the core print fell 0.3% beating consensus estimates of a 0.5% decline; however, both annual prints missed expectations. The pair dropped signficantly following the release of the BoE’s monetary policy decisions, which saw the central bank maintain its bank rate at 0.75% and its asset purchase program at £435 billion.
The cable fell after the BoE’s Monetary Policy Committee slashed its Q2 forecasts citing elevated downside risks. The pair was also weighed down by Boris Johnson‘s current lead in the Conservative Party leadership race.
The pair’s short-term performance is likely to be affected by Mark Carney‘s speech at the annual Mansion House dinner starting at 20:00 GMT.
The GBP/USD currency pair was trading at 1.2691 as at 15:20 GMT having dropped from a high of 1.2727. The GBP/JPY currency pair was trading at 136.50 having fallen from a high of 137.20.

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