Sterling fell around hundred pips after BoE Rate decision. As expected, BoE kept interest rates unchanged at 0.25% and policy makers voted 6-2 to keep rates unchanged.
BoE left Asset Purchase Facility unchanged at 435 billion pounds on 8-0 vote.
BoE said that some tightening of monetary policy would be required to achieve sustainable return of inflation to target, with monetary policy to be tightened by ‘somewhat greater extent’ than market expects if economy meets forecasts.
BoE lowered its inflation forecast, expecting inflation at 2.58% in one year (down from 2.64% forecast in May) and forecasts inflation in two years time at 2.19% (down from May’s forecast at 2.2%).
BoE expects inflation to peak at 3.0% in October 2017.
The tone of report was seen by markets as rather dovish, with pound being hurt by only two MPC votes for rate hike, as bulls were expecting 5-3 vote, hoping that Haldane would join two hawks, Saunders and McCafferty).
Quick pullback moves cable’s price from fresh multi-month high (1.3268, posted earlier in European session) and weakens near-term structure.
The price surged through thick hourly cloud and shifted near-term focus lower, as pullback retraced 50% of the upleg from 1.3051 to 1.3268.
Fresh near-term bears are now looking for pivotal supports at 1.3130 zone (rising daily Tenkan-sen / Fibo 61.8%) sustained break of which and today’s close in red would generate stronger reversal signal.