Bank of England summary reveals contradicting policymaker

Source: Dukascopy Bank SA
At 12:00 GMT on August 4, the Bank of England hiked its Official Bank rate by 0.50% from 1.25% up to 1.75%. In addition, the central bank has published its Monetary Policy Summary.

The Pound lost value due to the details of the monetary policy summary. Namely, one of the committee members did not vote for the 0.50% rate hike. Instead, the policymaker wanted only a 0.25% hike. It indicates that there has been discussion about easier monetary policy.

Quoting the statement: "The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 3 August 2022, the MPC voted by a majority of 8-1 to increase Bank Rate by 0.5 percentage points, to 1.75%. One member preferred to increase Bank Rate by 0.25 percentage points, to 1.5%."

Released Document

Monetary Policy Summary, August 2022

The GBP/USD reacted with an initial minor spike up above the 1.2210 level, prior to starting the decline. Eventually, the rate lost 91 base point or 0.75% over the span of then minutes after the release.

On a larger scale, the pair has been declining in a descending pattern since the start of May. It has been noted that round exchange rate levels like the 1.1800, 1.2000, 1.2200 and 1.2400 are acting as large scale resistance and support.

Initial Reaction

Larger scale situation

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