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John Wang
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Forex
May 7 21:30

Bank of England backs out of its plans and helps the pound

Currency on the rise while the economy is still contracting.
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The British pound saw gains on April 7. The currency is boosted by Bank of England’s decision to postpone its bond acquisition project and keep the interest rate stable.
The currency came back from its lowest position in two weeks. The central bank announced its decision early in the morning - a rare occasion. Earlier it has cut interest to 0.1% and commited to buying debt worth 200 billion pounds.
By 07:07 in London the pound gained 0.2% and stood at US$1.2369. Before the announcement it lost 0.3%. The briefing of the Bank of England’s Governor Andrew Bailey will follow shortly.
Traders will soon begin a session on the bonds market. June gilt are expected to start out between about 137.62 and 137.83.
In March the pandemic took the pound to the lowest position since 1985. In April the currency fought back and was trading around a US$1.25 mark. Nevertheless, the forecasts for the British economy is still pessimistic. The Office for Budget Responsibility warned that the economy can contract 13% in 2020.