GBP/USD came under selling pressure yesterday morning ahead of the Bank of England monetary policy announcement. The dollar was generally better bid too, and GBP/USD came close to falling below the 1.3100 figure.
Come midday the central bank announced that it was keeping interest rates on hold at 0.5% – no surprise – but the MPC votes from the last meeting, released at the same time, were a surprise, showing that the bank’s chief economist Andy Haldane had joined two other committee members by voting for a rate hike. It gave the pound an immediate lift, and GBP/USD popped higher by 80 points.
Cable got a further lift later on in the day as the US Philly Fed Manufacturing Index printed weaker than expected at 19.9 vs. forecasts for 29.0, the lowest reading since November. A US Supreme Court ruling yesterday also weighed on the greenback - the decision gave states the power to force online retailers to collect sales tax in states where they do not have a physical presence. GBP/USD pushed on through and convincingly up through the high 1.32s. Bank of England Governor Carney and Chancellor Hammond spoke at Mansion House last night but said little to have an impact on currency markets.