Pound Spikes Higher on BoE Rate Decision, Retreats on Dovishness

The  Sterling pound today spiked to  new daily highs after the  Bank of  England announced its monetary policy decisions early in  the  London session. The  GBP/USD currency pair later gave up most of  its gains as  investors digested the  BoE’s seemingly dovish stance on  the  economy amid calls for  more stimulus.
The  GBP/USD currency pair today spiked to  a  high of  1.2417 after the  BoE rate decision, but later gave up most of  its gains to  trade near its daily lows at  1.2310 printed at  the  open.
The  currency pair had little momentum at  the  start of  today’s session as  traders waited for  the  BoE’s decision. The  pair rallied higher after the  bank’s Monetary Policy Committee released its monetary policy report at  6:00 GMT. The  report showed that two MPC members Michael Saunders and  Jonathan Haskel, wanted the  bank to  expand its current quantitative easing programme. The existing plan has a  target of   £645 billion, which could run out by  July; hence, the  need to  expand it. The  BoE left interest rates at  0.10%, and  most analysts expect the  rate to  remain unchanged for  the  rest of  the  year. The  bank also expects UK GDP to  contract 14% this year and  to  grow by  2% in  2022.
Andrew Bailey, the  BoE Governor, commented that the  adverse effects of  the  current lockdown could last up to  a  year. Still, the  economic recovery could be faster than during the  2008 financial crisis.  
The  cable’s future performance is likely to  be affected by  geopolitical events and  the  US jobless claims report due later today.
The  GBP/USD currency pair was trading at  1.2358 as  at  09:52 GMT having fallen from a  high of  1.2417. The  GBP/JPY currency pair was trading at  131.60 having dropped from a  high of  132.08.

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