BoE Triggers Sterling Recovery
The Bank of England remains on track to raise interest rates in the first half of 2022 having delivered a more positive policy update, with market analysts pointing to the optimistic tone used saying it was a necessary means to ensure the Pound remains supportive of the Bank’s inflation objectives.
The British Pound rallied against most of its major pairs after the Bank opted to maintain interest rates and quantitative easing levels at existing settings but warned of the prospect of inflationary levels remaining elevated for a longer-than-expected period. The UK currency had fallen in the days leading up to the event, suggesting investors were wary the Bank’s Monetary Policy Committee (MPC) would sound a more cautious tone in light of slowing economic growth and the eruption of the recent energy crisis.
In level terms, GBP/EUR opens around the 1.1685, EUR/USD at the 1.1730 whilst Cable (GBP/USD) opens lower after a quiet overnight session, just above the 1.37 mark.
A much quieter day data wise after an eventful week see’s Federal Reserve Chair Powell speaking later this morning. Comments will be watched closely alongside positioning adjustments as another trading week draws to a close.