GBPUSD, 1 hr
Sterling saw choppy price action following the BoE’s triple serving of Announcement, Minutes and Inflation Report, partly reflecting difficulties markets have in digesting the sheer quantity of information (up until this year all three of these were released separately, spaced by one-week intervals). The pound initially dipped against both the dollar and euro as news of lowered growth projections (Q2 growth now seen at 0.3% q/q from 0.5% in February) and raised Brexit warnings hit the headlines. The currency subsequently more than recovered these losses, and both Cable and EUR-GBP are presently sitting at near unchanged levels relative to their respective bids seen just ahead of the announcement.
The BoE left inflation forecasts near unchanged and maintained that the next policy move would likely be a tightening. It also emphasized that economic and financial indicators are likely to be less informative than usual due to Brexit uncertainties. It seems that both sterling markets and the BoE are in a wait-and-see mode. Much will depend on the evoluation of polling outcomes as the Jun-23 referendum draws nearer. The FT Brexit poll tracker currently has 46% for “Remain” and 43% for “Leave,” while Ladbroke betting odds show 71% for the UK to remain in the EU.
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