empty
22.09.2023 10:30 AM
Why did the Bank of England keep interest rates unchanged?

The Bank of England unexpectedly left interest rate unchanged, the first time in almost two years. Earlier forecasts assumed a 0.25% hike, which will push rates from 5.25% to 5.50%. However, this did not happen.

While the August CPI data in the UK indicated a noticeable decrease from 8.7% to 6.7%, which many saw as a positive development, it remains far above the Bank of England's target level of 2%. Therefore, rate hikes will not yet stop, but just be paused instead.

The Bank of England also acted similarly to the Federal Reserve, hoping that the decline in inflation would continue in the context of a slowing national economy and reduced demand for goods and services. After all, even though it acts in its own interests, the Bank of England follows the actions of the Federal Reserve, which sets the tone in global markets.

An example of this points to when all significant central banks worldwide took pauses in raising interest rates in September, except for the European Central Bank, which unexpectedly raised its rate to 4.50% from 4.25%. However, looking closely at the actions of central banks in Western countries, as well as Australia and New Zealand, the absolute values of their key interest rates remain close to the level of the Federal Reserve's rate, thereby balancing their interest rate levels. This maintains a relationship that allows local producers to compete in global markets with their goods and services.

So, will the Bank of England raise rates further? It will, but only if the Fed does so or if inflation in the UK starts to rise again. For now, after the pause, there may be a sideways movement in GBP/USD, following a small correction, However, if market sentiment deteriorates again, the pair may resume its decline amid a general demand for dollar as a safe-haven currency.

Forecasts for today:

This image is no longer relevant

This image is no longer relevant

GBP/USD

The pair found support at the level of 1.2260. Improved investor sentiment following yesterday's sell-off could lead to an increase in risk appetite and, as a result, a weakening of dollar. On this wave, the pair may correct upwards towards 1.2375.

EUR/USD

The pair currently attempts to show a local upward reversal, where its rise above the level of 1.0670 will lead to a rebound towards 1.0740.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Fed Is Right—It's Too Early to Cut Rates (I Expect a Decline in #SPX and an Increase in Gold Prices)

The fresh U.S. Consumer Price Index (CPI) data released on Wednesday, although below the consensus forecast, confirmed the persistence of inflationary pressure. This fully justifies the Federal Reserve's reluctance

Pati Gani 10:37 2025-06-12 UTC+2

Trump Threatens Tariffs Again – Markets React

President Donald Trump announced yesterday that he intends to send letters to trade partners within the next one to two weeks outlining unilateral tariff rates. This is ahead

Jakub Novak 09:10 2025-06-12 UTC+2

What to Pay Attention to on June 12? A Breakdown of Fundamental Events for Beginners

A significant number of macroeconomic reports are set for Thursday, but only a few are truly important. The key reports to highlight are the GDP and industrial production data from

Paolo Greco 05:52 2025-06-12 UTC+2

GBP/USD Overview – June 12: Protests Against Trump and Fed Policy

The GBP/USD currency pair continued to trade very calmly on Wednesday. Naturally, when U.S. inflation data was released, we saw a brief burst of market reaction—though it didn't last long

Paolo Greco 04:07 2025-06-12 UTC+2

EUR/USD Overview – June 12: Is There Light at the End of the Tunnel?

The EUR/USD currency pair continued to trade very calmly throughout Wednesday. The market showed no reaction whatsoever to the seemingly positive news regarding U.S.-China trade negotiations. Why? Because that positivity

Paolo Greco 04:07 2025-06-12 UTC+2

Donald Trump Plans to Suppress the Uprising

For several consecutive days, protests and unrest have continued in some major U.S. cities, sparked by Donald Trump's new immigration policy. This time, the U.S. President has decided to deport

Chin Zhao 00:35 2025-06-12 UTC+2

EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S

Irina Manzenko 00:35 2025-06-12 UTC+2

Will the Dollar Maintain the Status Quo?

To make accurate predictions about the future, one must examine the past. The more than 10% rally in EUR/USD since the beginning of the year has been driven by four

Marek Petkovich 00:35 2025-06-12 UTC+2

XAU/USD. Analysis and Forecast

Currently, the price of gold remains confined within a weekly range. The key factors supporting price growth include a decision by the U.S. federal appellate court to uphold President Donald

Irina Yanina 18:35 2025-06-11 UTC+2

USD/JPY. Analysis and Forecast

At this stage, the Japanese yen continues to trade within an intraday consolidation range, approaching the two-week low against the U.S. dollar reached yesterday. The main factors influencing the movement

Irina Yanina 18:33 2025-06-11 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.