Pound little change after BOE minutes

SterlingThe British pound was little changed after the release of BOE minutes for the policy meeting held on 7 and 8 May.

The minutes showed that the MPC Committee voted unanimously to holding both interest rate at 0.50 percent and the amount of asset purchases at 375 pounds.

The market brought forward hike expectations after release of April minutes, the minutes said.

For two MPC members, the immediate policy decision remained finely balanced between voting to hold or raise borrowing cost.

However, all panel members agreed that it was more likely that the record-low interest rate would not go up over the three-year forecast period.

Those dovish comments kept pressure on the pound after dropping for three straight sessions.

“Productivity growth would pick up a little more gradually than expected at the time of the February Inflation Report as the continuing impact of changes in the composition of employment exerted a drag over the next few quarters,” the minutes said.

Regarding inflation, the minutes revealed that inflation rates close to zero were unlikely to remain very long. The BOE expectations was that CPI inflation would rise notably towards the end of the year.

Therefore, policymakers aim to set monetary policy so that it would be likely that inflation would return to the BOE’s 2 percent target within two years.

As of 09:22 GMT, the GBPUSD traded at 1.5511 after touching a low of 1.5471 and a high of 1.5533.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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