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GBP/USD Strengthens as BOE Maintains Rates

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GBP/USD Strengthens as BOE Maintains Rates

The British pound rose Thursday, as the Monetary Policy Committee opted once again to leave interest rates at historic lows.

The February rate decision marked the fifth consecutive year the benchmark lending rate was left at 0.5 percent. Bank of England policymakers also decided to maintain the level of quantitative easing at £375 billion.

Today’s rate decision is expected to be the last under the auspices of the BOE’s guidance strategy. The rate guidance, which pledged the BOE would not even consider raising interest rates until unemployment had fallen to 7 percent, has harmed the central bank’s credibility, according to several market voices. With UK unemployment at 7.1 percent, the central bank has indicated no plans to tweak interest rates. The BOE is expected to make adjustments to its guidance outlook next week.

In currency news, the British pound strengthened against the US dollar. The GBPUSD pair rose more than 20 pips to 1.6330, where it now sits as of 19:00 GMT. Technical support is ascending at 1.6155, 1.6196 and 1.6237. On the upside, the pair’s next test is 1.6368.

The pound was weaker versus the euro, after the European Central Bank opted to hold interest rates at 0.25 percent. The ECB has been under pressure to respond to weak inflation growth in the Eurozone. Consumer inflation in the currency region unexpectedly fell back to 0.7 percent last month. The EURGBP pair rose to a session high of 0.8350 in Europe before consolidating at 0.8351 at 19:00 GMT.

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