BOE’s Rate Cut Remarks Pushed GBP/USD Lower
Nathan Kay | Nov 12, 2015 01:05PM ET
The British pound struggled throughout this week against the US dollar, and it only got worse today. There was a major release lined up in the UK, as the BoE interest rate decision was announced by the Bank of England.
The market was not positioned for any surprises, but there was one. The BOE Governor mentioned that there is a chance that the bank could extend its QE and could cut rates if there is a risk of a downturn in the economy. It did not go down well with the GBP/USD pair buyers, as it was pushed sharply lower after the release.
At the current rate decision, there was no change in the interest rates and the BoE asset purchases. Moreover, the BOE MPC vote hike and cut figures were also in line with the market forecast of 1 and 0 respectively. The GBP/USD pair moved lower by more than 100 pips and traded below 1.5300. There was a sharp downside reaction after the release.
UK Halifax House Price Index
Earlier during the London session, there was another release in the UK. The Halifax House Price Index, which is the UK''s longest running monthly house price series presents house prices and property price movements on a like-for-like basis was released by the HBOS.
The forecast was lined up for an increase of 0.6% in October 2015, compared with the preceding month. However, the outcome was above the market expectation, as the Halifax House Price Index gained 1.1%.
Speaking of the 3m/YoY change, the index again came above the forecast with an increase of 9.7%, compared with the forecast of 9.5%. Commenting on the same, the Halifax housing economist, Martin Ellis, stated that “House prices in the three months to October were 2.8% higher than in the previous three months. This was slightly above the average of 2.5% on this measure over the first nine months of the year. The annual rate increased from 8.6% in September to 9.7%”.
Technically, the GBP/USD pair is under major bearish pressure, which might increase moving ahead. We need to see whether the 1.5250-60 support area hold in the short term or not. A break below it might open the doors for a test of the 1.5200 level and may be even 1.5160.
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