The British pound has taken a hit today Against its US counterpart after an unexpected dovish speech from the Bank of England put to sleep and rate hikes in the nearest future.
At 6.53pm (GMT) the British currency was trading at $1.2880 down from $1.2936 in yesterday’s trading session,
Most analysts had been predicting a bullish speech from the BOE and was expected to set the stage for a potential rate hike in the coming months, but like last time, only one board member, Kristin Forbes voted to hike rates while another expected follower, Michael Saunders refrained,
“Some pound positioning seems to have been based on a more hawkish Bank after chatter on the street that Saunders would vote for a hike after his speech in April and this has contributed to the sharp fall in the pound,” said Neil Wilson, an analyst at ETX Capital.
The Central Bank also predicted that inflation would run at 1.9 percent this year, slightly below an earlier forecast of 2 percent, enforcing their cautious approach and reluctance to raise interest rates,
“Although no change in policy was expected, the release of poor economic data this morning which showed a widening trade deficit has been seen as confirmation of a slowdown by economists, validating the BoE’s more cautious approach.”noted Paresh Davdra, CEO and Co-Founder of Rational FX