GBP/USD has been trading in an unclear manner this week, Going in a bearish manner over an outperforming dollar and slighty strong against the euro. Cable, now back in the mid-1.50s, is now looking a little better valued after surging its post-UK election increasing to a six-month high at 1.5815 on May-14. This better reflects uncertainty about the EU membership issue and holding rebound in the U.S. economy following its Quarter 1- initials-Quater 2 soft patch. The Fed is still slightly to be at least six months ahead of the BoE in tightening. BoE Governor Carney was, last week, careful to stabilize tightening expectations, saying yesterday that sterling strength is a stabilizer on growth and that "we're not going to do is put up interest rates too soon or too fast and slow the economy." The Sonia forwards market is not factoring in a BoE until late Q2 2016. ticked up to highs of 1.5536 from around 1.5500 ahead of the minutes.
The minutes showed that the Monetary Policy Committee was unanimous in voting to keep rates on hold this month and its quantitative-easing program unchanged.
The MPC voted 9-0 to keep interest rates at 0.5%.
According to the minutes, two MPC members saw the decision as "finely balanced", while all members agreed that rates more likely than not to go up over the next three-year period.
"While there was a speculations over the most likely future path for Bank Rate, most members proposed ," the minutes said.
The BoE sentiment on this is that the U.K. economic growth will bulled in the second quarter, with lower inflation boosting incomes, after the economy added a slightly 0.3% in the first quarter of the year.
The minutes emphasized on the banks view that record low inflation rates are not likely to continue for long term and that consumer prices will pick up certainly towards the end of the year.
Data on Tuesday showed that the U.K. going through a bad inflation in April for the first time since 1960, with the annual rate of inflation falling 0.1% after remaining flat in the previous two months. my sentiment on this is i forsee a bearish market this coming week.
