Sterling rose slightly against the dollar after the Bank of England announced it kept its benchmark interest rate unchanged as forecast at 0.5 percent. The central bank also held its asset purchase programme at 275 billion pounds as expected.
In October, the BOE monetary policy committee decided to extend its 200 billion pound quantitative easing program by added 75 billion pounds of gilts.
This month the committee prefers to leave the programme unchanged until it assesses the impact of existing measures.
Despite a series of gloomy events in Europe recently, with Greece and Italy risking pushing the whole of Europe into debt, the BOE believes the current asset buying programme is sufficient. This plan covers a four month period from November to February so it was unlikely for the BOE to revise its plans after only a few weeks of launching it in October.
Attention will therefore turn to the Bank’s quarterly inflation report, due on November 16, which will contain the new forecasts. The Bank is expected to take a much more pessimistic view on growth and may also predict an even steeper decline in inflation in the medium-term from the high of 5.2 percent hit in September.
After initially dipping following the announcement at 12 noon London time, the British pound bounced back up against the dollar and the yen. GBPUSD jumped from the dip of 1.5898 to 1.5938 within minutes where it has settled into a range in the past 20 minutes.