GBP/USD Responds Positively as BoE Cuts Rates To Historic Lows

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Mar 19, 2020
  • BoE slashes main interest rate from 0.25% to 0.1%
  • Pledges to increase buying of government bonds by £200 billion
  • GBP/USD up 1.35% on the day after hitting multi-decade lows yesterday

Bank of England (BoE) announced today that it cut its base rate to a historic low of 0.1%. In addition, the central bank will increase holdings of government bonds by £200 billion i.e. quantitative easing (QE).

In the statement, BoE said that its monetary policy committee (MPC) “voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion”.

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This action marks the first big decision for the new Governor Andrew Bailey, who replaced Mark Carney this week. The central bank made a similar move last week when it slashed rates from 0.75% to 0.25%.

GBP/USD is trading 1.35% up on the day after printing a 35-year low yesterday.

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