Bank of England repeats Fed position

 

 

The British currency declined against the US dollar to 1.3920. As expected, the Bank of England left its monetary policy parameters unchanged at its meeting on Thursday. The asset purchase mechanism also remained unchanged at 895 billion pounds.

Central Bank chief economist Andrew Haldane voted to reduce the target for these purchases to 拢 825 billion. In an accompanying statement, the central bank called the rise in inflation temporary and said it did not want to undermine the recovery by premature tightening. But the absence of any mention of a change in monetary policy seems to have disappointed market participants. The price decline remained marginal amid weak dollar movement, which struggled to gain some support amid mixed signals on US inflation.

The regulator also noted that after the previous meeting of the Bank of England, global price pressure increased and manifested itself in consumer price inflation in some advanced economies. After the May report, bank employees revised their expectations regarding the level of GDP for the second quarter of 2021 by about 1.5%. Most Committee members believe that the forthcoming data may provide an early indication of the sustainability of inflationary pressures across the economy. The Bank of England also believes that it should attach importance to the dynamics of inflation over a longer period of time and continue to closely monitor changes in the indicators of medium-term expectations.

In our forecast, we expect a decline in the pound/dollar rate to the support levels of 1.3900, 1.3870, and 1.3850.