Sterling drops after BoE’s signals of inflation easing

Pound Sterling slides versus the US dollar after the BoE meeting. This comes after Andrew Bailey’s comments on easing inflationary pressures. BoE Chairman adds that inflationary risks are still skewed to the upside and secondary effects are persistent.

The Pound experiences heightened volatility against the dollar following the Bank of England (BoE) monetary policy meeting on Thursday. It is trading in the lower 1.25s at the time of writing, showing a bearish short-term bias as investors digest the BoE event.

GBP/USD initially fell following the BoE’s announcement of its decision by a vote of 7-2 to raise interest rates by 0.25% bringing the Bank Rate to 4.50%.

Dovish opening remarks from the BoE’s Andrew Bailey further weighed on the pair, after he said the committee had good reason to believe headline inflation would fall considerably from April onwards. The Pound Sterling recovered later during Bailey’s press conference, however, when he emphasized secondary effects and how “risks to inflation continue to be skewed to the upside as secondary effects persist”.