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Pound Falls After BoE Fails to Deliver Adequate Stimulus Measures

June 18, 2020 at 16:45 by Simon Mugo

£10

The Sterling pound today spiked higher shortly after the Bank of England left its lending rate unchanged and increased its stimulus program by £100 billion as expected. However, the GBP/USD currency pair’s rally was short-lived as the pair quickly headed lower as investor risk appetite faded in the face of rising coronavirus infections globally.

The GBP/USD currency pair today fell from an opening high of 1.2563 to a low of 1.2402 in the American session as traders sold the pound and bought the safe-haven dollar.

The currency pair was under selling pressure at the start of today’s session driven by the risk-off market sentiment that favoured the dollar. The rising tensions between China and India as well as China and the US also made investors prefer less risky investments. The pair’s spike higher coincided with the Bank of England’s release of the summary of its monetary policy decisions. The BoE’s Monetary Policy Committee voted to maintain its lending rate at 0.10% and its asset purchase programme at £745 billion as expected. However, Andrew Bailey, the bank’s Governor held bank on its quantitative easing measures by adding the expected £100 billion instead of a higher figure.

The release of disappointing US initial jobless claims data by the Department of Labor had a muted impact on the pair, which kept falling, despite US jobless claims rising to 1.5 million versus the expected 1.3 million. The upbeat US Philadelphia Fed manufacturing survey for June drove the pair lower.

The cable’s future performance is likely to be affected by tomorrow’s UK retail sales data and geopolitical events.

The GBP/USD currency pair was trading at 1.2409 as at 16:44 GMT having fallen from a high of 1.2563. The GBP/JPY currency pair was trading at 132.58 having dropped from a high of 134.36.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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