GBP/USD is back to focusing on Brexit

May 02,2019 14:54   Source:Forex Crunch
  • The BOE has left its policy unchanged in a unanimous vote, as expected. 
  • They strike a balance between positives and negative, seeming keen not to rock any boat.
  • , with cross-party talks in the limelight.

Does the Bank of England want to stay in the shadows? This is the impression one may get from the radically balanced message.

On the one hand, the BOE has hiked growth forecasts but has reduced inflation projections. It said that the path of rate hikes is higher than markets see, but that the cost of waiting is low.

In the press conference, Governor Mark Carney echoed the Fed by listing the recent improvement in the global economy but noted the domestic tensions. The investment slump is nearing the worst in the post-war era, but companies are hiring.

And what about Brexit? The statement states that the Bank’s reaction to Brexit may go both ways. In the press conference, Carney expressed worries that stockpiling in Q1 may lead to weak growth in Q2. However, he said that the House of Commons voted against a no-deal Brexit and that the BOE assumes a smooth exit.

Nothing to see here?

Carney said that hard and soft data might contradict each other and trigger volatility while his balanced messages prevent any volatility in GBP/USD.

The Canadian governor has dodged questions about his successor. Perhaps he wants to make a quiet exit when his term ends at year-end rather than make his mark and leave a legacy.

All in all, the BOE’s Super Thursday may be seen as an effort not to be super and leave the stage to Brexit developments.

The focus shifts back to cross-party talks about Brexit. An agreement can boost the pound while a breakup of talks could send Sterling stumbling down.

The post appeared first on Forex Crunch.



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