The Pound remained indifferent. Overview for 07.05.2021

GBPUSD barely responded to the results of another BoE meeting. 

The British Pound continues trading within a narrow consolidation range against the USD on Friday morning. The current quote for the instrument is 1.3908.

Everything went as expected: the benchmark rate remained at its low of 0.1%, while the Quantitative Easing program was left intact at £895B.

However, the word that was on the market lately was finally confirmed. At the end of its May meeting, the Bank of England announced a slowdown in the pace of purchases of British government bonds to £3.4B per week instead of £4.4B previously. At the same time, the date when the program is set to be over remained unchanged. The regulator also emphasized that this decision was not a signal to change its monetary policy. 

The British Central Bank raised its GDP forecast for 2021 sharply to 7.25% from its previous estimate of 5% growth made in February. For 2022, however, the economy is seen expanding 5.75%, less than February's projections of 7.25%. According to the regulator’s expectations, the British economy should get back to its pre-covid growth rates in the last quarter of 2021. 

In the comments that followed, the Bank of England specifically emphasized that inflation risks were generally balanced and there was some uncertainty about the size of the economic slump but it’s okay.

Overall, the decision made by the Bank of England may be considered as a support factor for the Pound and it will show up later.