- GBP / USD had moved lower on Thursday, even though the USD weakened.
- The latest Bank of England policy update did little to impress investors.
- The Bank of England kept interest rates unchanged and increased the size of its QE program to 875 billion pounds.
The pair GBP / USD has recovered around 100 pips after the BoE announcement and has soared to new session highs, around the 1.3040 level, although it has lacked continuation.
The pair was extending the sharp retracement of the previous day, from nearly two-week highs around the 1.3140 region, and was witnessing some subsequent selling during the Asian session on Thursday. However, the GBP / USD pair stopped its intraday decline and managed to recover quickly from the 1.2930 area after the Bank of England decided leave benchmark interest rates unchanged at 0.10%.
The support factor, to a greater extent, has been offset by a larger-than-expected increase in the size of the Bank of England’s asset purchase program, which now stands at £ 875 billion, compared to the previous 745 billion. Furthermore, the UK central bank also showed its willingness to further increase QE if the market performance worsens, saying that risks to economic recovery remain skewed to the downside.
Meanwhile, the GBP / USD pair is struggling to capitalize on the recovery attempt around the 1.3020 region. Even a slightly softer tone around the US dollar has failed to impress the bulls or provide any additional significant boost. The dollar took a hit after the former vice president Joe Biden will increase his advantage in an American election.
The focus of attention now shifts to FOMC monetary policy update, to be announced during the American session. This, coupled with US political developments, will influence USD price dynamics and produce some short-term trading opportunities around the GBP / USD pair.
Credits: Forex Street
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