After growing for three consecutive trading sessions, GBPUSD started consolidating.
The British Pound is consolidating against the USD on Friday after a significant improvement earlier. The current quote for the instrument is 1.3336.
During its December meeting, the Bank of England decided to raise the benchmark interest rate from 0.10% to 0.25%. It’s the first rate hike in three and half years. The decision was made 8 votes against 1.
As for the QE programme, it remained unchanged at £875B (plus £30B of corporate bonds) and the regulator was mum on any changes here. The BoE chose a different approach, which implies raising the rate first, and then tapering the QE.
In the comments, the regulator said that there were signs of stable inflation, which made the BoE nervous. It’s not quite clear right now how the Omikron strain will influence the country’s economy but the regulator is expecting it to affect inflation. It is essential to respond to high inflation.
It seems rather unusual: as a rule, the bank of England sticks to its conservative stance when it comes to inflation and prefers to avoid talking about it. In most cases, inflation requires no interference and reaches stability by itself. However, this time the British regulator may have to be more aggressive and act preventively because of the measures implemented by the US Fed.