British Pound Consolidates as BOE Leaves Rates Unchanged, Will Continue QE Efforts

The British pound has remained contained to a tight range versus the US dollar of 1.4600-1.4750, as the Bank of England left the Bank Rate at a record low of 0.50 percent, as expected, which marked the first “no change” decision since September 2008. The BOE Monetary Policy Committee’s (MPC) statement was short and sweet, providing little in the way of new information. The MPC did indicate that they would continue with the quantitative easing efforts announced on March 5, but that it would take another two months before the program was completed because they had only purchased 26 billion pounds in assets of the planned total of 75 billion pounds. Ultimately, there are still significant downside risks for the UK’s economy and financial system, but as it stands, the markets are broadly anticipating that the BOE will continue to leave the Bank Rate at 0.50 percent throughout the remainder of the year, since further reductions are unlikely to have much of an impact. In the near-term, it may be worth looking for a GBP/USD break out of its recent range, but of risk aversion returns, the pair’s break could be a bearish one.