BREAKING: GBP sinks after BoE keeps rates unchanged

Bank of England announced its latest monetary policy decision today at 12:00 pm BST. Median consensus among analysts is for a 25 basis point rate hike, to 5.50%, with 7 MPC members voting for a hike and 2 voting to keep rates unchanged. This would mean that one less MPC member opted for a rate hike than at the previous meeting (8-1 split). Money markets priced in a 55% chance of 25 basis point rate hike prior to the meeting.

Actual decision turned out to be a surprise - rates were left unchanged at previous level. 5 MPC members voted to keep them unchanged while 4 MPC opted for a hike. Governor Bailey was among those who voted for a no change in rates. Bank of England also decided to cut gilt-purchases by 100 billion GBP over the next 12 months. While rates were left unchanged, BoE cautioned that further tightening is required if inflation persists.

GBP took a hit on the decision with GBPUSD moving to a fresh daily low near 1.2234. However, part of the drop has been erased already.

Source: xStation5