The Sterling pound today had a muted reaction to an emergency rate cut by the Bank of England after the close of the London markets. The GBP/USD spiked higher briefly before heading lower as the greenback posted gains due to high demand.
The GBP/USD currency pair today fell to a low of 1.1471 before rallying to a high of 1.1793 after the BoE rate cut, then giving up most of its gains to trade sideways at the time of writing.
The currency pair was under pressure from the start of today’s session as investor risk appetite remained at all-time lows driving the demand for the greenback as tracked by the US Dollar Index. Investors’ skepticism of the British government’s efforts to combat the coronavirus as of yesterday also did not help the pair. However, the pair found a floor at its daily lows as buyers stepped in and pushed it higher, stopping the bearish pressure for the rest of the session. The announcement of the rate cut by Andrew Bailey, the new BoE Governor, had a muted impact on the pair as the dollar was rallying at the time.
Bailey clarified that the BoE was ready to do more to support the British economy apart from the 15 bps cut. The Governor also announced the expansion of the BoE’s quantitative easing program by £200 billion to be used in purchasing both government and corporate debt.
The currency pair’s future performance is likely to be affected by geopolitical events and US dollar dynamics.
The GBP/USD currency pair was trading at 1.1612 as at 17:49 GMT, having fallen from a high of 1.1793. The GBP/JPY currency pair was trading at 128.07, having dropped from a high of 129.57.
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