Global macro overview for 04/02/2016:
The Bank of England decided to keep the interest rate unchanged at the level of 0.5% and asset purchase facility at the level of 375B pounds. Moreover, the BoE flagged the recent sharp sell-off in global financial markets and investors' jitters over a slowdown in China as it revealed that policymaker Ian McCafferty dropped his recent call for a rate rise. The official rate votes were different than on the last meeting as this time all members voted unanimously against the rate hike (0-0-9). According to the latest meeting minutes, the wages growth was weaker than expected, the inflation forecast was slashed to 0.4% in Q1 (0,7% prior), and the GDP growth was decreased to 2.2%, down from 2.5% previously. In conclusion, the BoE is on hold currently as immediate tightening of the monetary policy was not necessary at this point of time. Nevertheless, a long-term possibility is that rates are still more likely to go up than down.
Let us now take a look at the GBP/USD technical picture after the BoE decision was revealed. The pair has managed to break out to the 61% Fibo at the level of 1.4614 just before the decision, and now it is trading around this level. The daily candle close might be very important in order to determine whether the longer-term downtrend is over now or this is just the first leg of the ongoing upward correction.