GBP/USD confused!

Hey guys - ive been following the news today, I had my eye out for the obvious BOE inflation report at 10.30am.

When the news came out, which I think we all expected, GDP growth was cut to near zero.

What I cant understand, please dont hate me, is why this caused an increase in the value of GBP against the dollar?

I would have expected GBP to fall through the floor as this is quite a worrying signal!

Many thanks in advance for any words of wisdom, it would be great to get my head around this!


News releases are mainly factored in to price. The reason why GBP rose was because there was risk appetite but looking at the bigger picture (daily and weekly time frames), the pair is in consolidation and getting ready for a big move up or down. It’s not yet clear which one.

Bloomberg put this down to the fact that King hinted that there was going to be no rate cut in cost of borrowing.

Am I right in thinking that this acts as a catalyst in support for the pound because it coosts demand due to carry trades?


Correct. Reducing interest rates generally weakens a currency