The Bank of England cut interest rates by 25bp to 5.00 percent. The statement was fairly balanced with the central bank concerned about mounting growth and inflation risks.
The price action in the British pound following the rate decision illustrated the market’s confusion on how to interpret the BoE statement. The GBP/USD fluctuated within a 70 pip range for 3 hours before finally collapsing on broad dollar strength. The BoE rate decision must have been a tough one with inflation and growth both major concerns for the central bank. We will not get any further clarity on the tone of the meeting until the minutes are released on April 23rd.