The GBP/USD rose slightly after the Bank of England (BOE) delivered its final interest rate decision this year. This decision came a few hours after similar decisions by the Swiss National Bank (SNB) and the Federal Reserve.
British pound index
BOE leaves rates unchanged
In its final decision of 2020, the bank decided to hold fire as they continued to focus on the ongoing negotiations on Brexit.
The bank left the interest rate unchanged at 0.1% and the limit of the quantitative easing program at £895 billion ($1.2 trillion). This decision came a month after the bank decided to add the ceiling of the purchases by £150 billion.
In a statement, Andrew Bailey, the bank’s governor, said that the committee was committed to doing more to offer support to the economy. This could include more rate cuts and asset purchases. He said:
“The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”
The BOE decision came at a difficult time for the UK economy. Data released this week showed that the number of redundancies is increasing as more firms downsize. Also, yesterday, numbers showed that consumer prices have continued to drop, putting more pressure to the BOE.
Most importantly, the UK and the European Union are yet to reach an agreement, with time running out. As we have written before, a no-deal Brexit would have a catastrophic impact on the UK, which sells more than 40% of its goods to the European Union.
