BoE left the repo rate at 0.75% and QE unchanged, as had been widely anticipated. The votes for both decisions were unanimous at the nine-member committee, which had also been expected. The statement and minutes don’t convey much shift in guidance, being so soon after last month’s quarterly Inflation Report, and especially with Brexit uncertainty having put monetary policy in limbo. Domestic inflation pressures were noted to have continued to rise, though the outlook for GDP growth has weakened, with growth of just 0.2% q/q in both Q4 and Q1 envisioned. BoE also noted an intensification of Brexit uncertainty since the November policy meeting, which stands to reason given there remains a multitude of possible scenarios in the coming months as the official date for the UK exiting the EU, on March 29, bears down. The outlook for BoE policy is contingent on Brexit, ranging from a disorderly no-deal exit scenario, to a complete about-turn, remaining-in-the-EU scenario, which is conceivable should there been a new referendum and should the public vote that way (and which would likely see BoE hike rates and the Pound rally sharply). Currently, however, the Pound remains pressured. GBPJPY has the 140.50-140.00 area as it’s next Support zone, with the intraday H4 and H1 support at 141.45.
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Head Market Analyst
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