The Pound has reversed it’s first reaction to the seemingly Dovish news coming out of the Bank of England and now trades higher against most it’s pairs when the plethora of data was released. The change in PMC votes from 8-1 to 9-0, which saw lone dissenter Ian Mccafferty join the consensus, was unexpected and arguably the most Dovish of all alterations to the last meeting.
The inflation report (released quarterly so absent last time) contained further downgrades to the November 2015 edition, with 2017 now expected to experience a 1.2% rise in prices compared to 1.5% earlier. Additionally the pace of economic growth is now expected to slow by 0.3% to 2.2% this year.
The GBPUSD sold off from 1.4590 immediately following the release to hit a low of 1.4530. However we then saw buyers attracted back into the market and price currently sits above it’s level prior to the news. BOE Governor Carney is still talking, so the excitement maybe not over for the day. This turnaround is potentially symbolic of an overly dovish market, whereby even events that should see selling fail to do so, maybe suggesting the path of least resistance now lays higher.
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