GBP rallies on MPC

Following yesterday’s GBP focussed email (see below for an upbeat assessment), GBP has rallied today as The Bank of England's (BoE) Minutes of the Monetary Policy Committee (MPC) meeting showed that the MPC did not wish to send a signal that a negative bank rate was "in prospect or even imminent."

Whilst keeping rates UNCHANGED, and asset-purchased UNCHANGED, the Governor’s speech gave a  more balanced, 2-sided view of the economy than the market expected.

Despite mentioning that flat rates or negative rates MIGHT be analysed in the future, the Bank took lower rates off the table, and GBP rallied. GBP/EUR the biggest mover, through the critical 1.1370 level, touching 1.1400

GBP/USD is battling a much-stronger USD, and struggled to push recent highs, but hit the 1.3700 mark.

This still leaves important employment data from the US tomorrow, but at the moment, GBP is the stellar performer.

AUD: Increased asset-purchase programme overnight, and kept rates steady. Along with this, the central bank boosted AUD by giving a positive assessment of the economy, and reduced its unemployment forecasts, for a more optimistic medium term outlook:
Quote: “Clearly, unemployment has been recognized as the biggest policy and domestic problem arising from the COVID-19 pandemic… the RBA changed its forecast for unemployment to hit 6% by the end of this year. The RBA’s November forecast anticipated the unemployment rate falling through 2021 from 8% to 6.5%.”

NZD: Employment data this week showed a VERY resilient picture of the workforce, boosting NZD, which had to battle hard against a stronger USD environment. An employment rate of 4.9% is within the central bank’s target rate, meaning we are unlikely to see a rate cut from NZ in the short-term. This will keep a floor on NZD price-action.