08.08.2025 16:45

The Bank of England's (BoE) Monetary Policy Committee (MPC) surprised financial markets with a split vote on interest rates, resulting in a 25 basis point cut to bring the policy rate to 4%. This unexpected outcome followed an initial deadlock where the committee couldn't reach a consensus, necessitating a revote. The initial vote revealed a three-way division: four members favored holding rates steady, another four voted for a 25 basis point reduction, and one member advocated for a more substantial 50 basis point cut. Concerns about persistently high food prices and their inflationary impact played a significant role in the deliberations.

Following the MPC's decision, the Pound Sterling (GBP) strengthened against the US dollar. OCBC's FX analysts, Frances Cheung and Christopher Wong, noted that GBP reached 1.3440. While exhibiting signs of a modest bullish trend, daily momentum indicators suggest a cautious optimism. The analysts highlighted that the Relative Strength Index (RSI) showed a moderation in its upward movement.

Adding to the uncertainty, Deputy Governor Ramsden expressed surprise at the persistent nature of inflation. Governor Bailey acknowledged a downward trajectory for inflation, yet voiced "genuine uncertainty" regarding the extent of future rate cuts. This uncertainty stems from the BoE's efforts to balance the risks of a potential economic slowdown with the need to curb inflation effectively. Market sentiment now reflects only a 70% probability of a further 25 basis point rate cut by the end of 2025.

Technical analysis from OCBC points towards GBP/USD consolidation within the 1.33 to 1.35 range. Key resistance levels are at 1.35 (50-day moving average), while support can be found at 1.34 (21-day moving average), 1.3360 (100-day moving average), and 1.3140 (38.2% Fibonacci retracement of the 2025 low to high). This range reflects the current market indecision following the BoE's unexpected vote. The information presented here was sourced from internet resources.