Trade Desk Thoughts - U.K. Official Bank Rate

U.K. Official Bank Rate Actual 5.00%, Expected 5.00%, Previous 5.00%

Release Explanation: This is the Interbank overnight lending rate. It sets the tone for mortgages, commercial loans, and all economic lending criteria, and the London Inter Bank Overnight Rate (LIBOR). The Monetary Policy Committee (MPC) is led by Mervyn King, some of the other Members include: Deputy Governor Rachel Lomax, the Bank Chief's Economist Charles Bean, and the usual dissenter to any Rate hike David Blanchflower. Paul Tucker and Kate Barker are independent of the Bank.

Trade Desk Thoughts: The Bank of England's Monetary Policy Committee decided to leave the official bank rate unchanged at 5.00%. This is the sixth consecutive meeting in which bank officials decided to keep the current monetary stance, after they cut 25 basis points twice since the beginning of the year. However, most economists believe the bank will have to cut rates sometime later this year, as the economy faces a deep recession. The minutes from the last meeting revealed that the bank's members are split over the future of the interest rates, having one vote for a raise, one for a cut and seven for a hold.

Forex Technical Reaction: The pound strengthened immediately after the release, gaining 40 pips. Today is the first time in 7 days that the pound has actually advanced against the dollar. Against the euro, the pound gained 45 pips and the pair is now breaking the low of the previous session.

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