The pound strengthened and rose to two weeks high against the US dollar on Thursday after the Bank of England kept monetary policy unchanged and said recent market turmoil related to China’s slowdown hasn’t altered the view that the time for a rate increase is approaching.
Ian McCafferty voted for a 0.25% hike in the benchmark rate to 0.75% for the second consecutive month. The MPC voted unanimously to make no changes to the £375 billion asset-purchase program.
The bank’s meeting showed that policymakers are concerned that the risks faced by emerging markets such as China have increased, since its last meeting in August.
However, the minutes noted that these developments are not yet serious enough to undermine the recovery in the U.K. economy.
“Domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence”, the minutes said.
Intra-day bias remains bullish as 21 and 55 EMA is crossed upward for further indication of buying in the pair. More rise is expected to 1.55266( weekly resistance 2). Also SSRC and MACD oscillator shows more bullish momentum is expected in the pair.
Tomorrow investors would be taking close look at USD PPI and Prelim Consumer Sentiment for further insight as to know whether there would still be a rate hike in next week’s FOMC meeting.