The GBP/USD pair is plummeting on Thursday afternoon; the Bank of England raised the key rate for the first time in 10 years.
The British Pound is getting weaker against the USD in response to the BoE’s raising the benchmark rate. The current quote for the instrument is 1.3124.
So, during its November meeting, the British regulator increased the key rate for the first time in 10 years. Now, it’s 0.50% after being 0.25% before. Investors expected this decision; however, their reactions were much stronger. It is also known that the stock of UK government bond purchases, the QE program, remained unchanged, at £435B.
The British key rate increase means that even on the threshold of the Brexit and possible additional load on the country’s financial and monetary systems, the British economy is looking pretty solid and reliable. In addition to that, the current inflation reading might as well allow to change the regulator’s conservative fiscal policy to a more active and progressive one.
A bit later, the Bank of England will publish the MPC meeting minutes and the most interesting things for investors are any hints to the next steps and actions of the regulator. The British regulator is highly likely to be very careful and straightforward in order to avoid additional market volatility.
RoboForex Analytical Department