GBPUSD: Long At 1.3200
The Bank of England said it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain's economy was proving less severe than it had predicted only last month.
The BoE's rate-setters voted unanimously to keep Bank Rate at 0.25%, after cutting it in August for the first time since 2009 to tackle the shock of Britain's vote to leave the European Union.
Policymakers also voted 9-0 to keep their government bond-buying target at August's new, higher level of GBP 435 billion and to stick with a new plan to buy up to GBP 10 billion worth of corporate debt.
August's stimulus was Britain's largest since the global financial crisis. But since then a string of indicators have rebounded from July's slump, leading some lawmakers to chide BoE Governor Mark Carney for being alarmist about the Brexit vote.
Central bank staff estimated the economy will grow by 0.3% in the July-September period, better than their previous forecast in August of a slowdown to 0.1%. The Bank also said inflation would rise more slowly this year than it previously thought.
"The Committee's view of the contours of the economic outlook following the EU referendum had not changed," the minutes said. If the November forecasts were "broadly consistent" with August's, "a majority of members expected to support a further cut in Bank Rate to its effective lower bound at one of the MPC's forthcoming meetings during the course of the year," they said, reiterating the message of August.
Two BoE rate-setters who last month opposed the expansion of the government bond-buying programme said they still did not think it was needed, but voted in line with their colleagues because reversing the decision now would be too disruptive. Under a new MPC calendar, the Bank's next rate decision is scheduled to take place on November 3. Unlike the European Central Bank and the Bank of Japan which have cut interest rates below zero, BoE Governor Mark Carney has said he does not favour resorting to negative rates in Britain for fear of damaging the country's big banking sector. A rate cut to 0.1% is possible in November, although financial markets might react sensitively to any data in the coming weeks that they think could prompt a BoE rethink.
Our long-term GBP/USD outlook is bullish. We have got long at current market price (1.3200) in the short-term part of our porfolio.
GrowthAces.com - Daily Forex Signals
The BoE's rate-setters voted unanimously to keep Bank Rate at 0.25%, after cutting it in August for the first time since 2009 to tackle the shock of Britain's vote to leave the European Union.
Policymakers also voted 9-0 to keep their government bond-buying target at August's new, higher level of GBP 435 billion and to stick with a new plan to buy up to GBP 10 billion worth of corporate debt.
August's stimulus was Britain's largest since the global financial crisis. But since then a string of indicators have rebounded from July's slump, leading some lawmakers to chide BoE Governor Mark Carney for being alarmist about the Brexit vote.
Central bank staff estimated the economy will grow by 0.3% in the July-September period, better than their previous forecast in August of a slowdown to 0.1%. The Bank also said inflation would rise more slowly this year than it previously thought.
"The Committee's view of the contours of the economic outlook following the EU referendum had not changed," the minutes said. If the November forecasts were "broadly consistent" with August's, "a majority of members expected to support a further cut in Bank Rate to its effective lower bound at one of the MPC's forthcoming meetings during the course of the year," they said, reiterating the message of August.
Two BoE rate-setters who last month opposed the expansion of the government bond-buying programme said they still did not think it was needed, but voted in line with their colleagues because reversing the decision now would be too disruptive. Under a new MPC calendar, the Bank's next rate decision is scheduled to take place on November 3. Unlike the European Central Bank and the Bank of Japan which have cut interest rates below zero, BoE Governor Mark Carney has said he does not favour resorting to negative rates in Britain for fear of damaging the country's big banking sector. A rate cut to 0.1% is possible in November, although financial markets might react sensitively to any data in the coming weeks that they think could prompt a BoE rethink.
Our long-term GBP/USD outlook is bullish. We have got long at current market price (1.3200) in the short-term part of our porfolio.
GrowthAces.com - Daily Forex Signals
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