Bank of England Slashes Rates, GBP Falls

The Monetary Policy Committee (MPC), the British equivalent to the FOMC has cut the UK’s overnight lending rate from 1.0% to 0.5%. Apparently this is the lowest rates have been in several hundred years, going back almost to the inception of the bank in 1694. Accompanying the rate cut, the BoE following after the Federal Reserve announced it will begin engaging in quantitative easing through the purchase of $75B medium and long-term gilt over the next several months to combat deflationary pressure.

GBP has responded this time around in intuitive fashion: GBP/JPY, GBP/USD and GBP/CHF have each sold off 125-200 pips since London opened, while EUR/GBP has rallied 80 pips as it continues to wind through a symmetrical triangle begun 4 weeks ago.

Next up in just a few minutes the ECB will make their own announcement….