The US Dollar became 0,11% stronger against the British Pound in advance of the American trading session. The currency pair is currently trading around 1,6938. The Bank of England left the benchmark interest rate at the minimal level, thereby risking to create a price bubble in the UK housing market.
The BOE decided to leave the key interest rate unchanged at 0,5%. At the same time, it decided to leave the asset purchase program unchanged at 375 billion pounds, which is equivalent to $636 billion dollars.
Market participants anticipated this decision, which followed the Bank of England's inaction seen last month.
Still, the UKs housing market keeps seeing problems. Low interest rates promote higher housing prices. According to the Nationwide index, the housing prices increased by 1,2%.
Overpriced London dwelling property is currently distorting the overall picture in the Uk housing market. Some experts assume that the BOE should have started rasing interest rates in order to avoid the forming of a new price bubble.
Still, the forecast gives us to understand that the Bank of England is not going to raise interest rates until November 2014. If the central bank remains idle, it may let the situation in the housing market go too risky, which once led t a collapse of the entire financial system of the UK.
GBPUSD: Forex
GBPUSD showed a rather reserved reaction to the latest decision made by the Bank of England because most market participants anticipated this state of affairs.
Masterforex-V Academy conducted comprehensive analysis to find out the near-term prospects of the currency pair. The H4 chart of GBPUSD indicates that a bullish tendency in the market.
The price is currently above th top of the MF sloping channel. A retracement is likely, especially if the price breaks below 1,6917. If this is the case, we may see GBPUSD go further down to 1,6820.
This level of support is defending the upward tendency. The scenario is represented by the red arrow.
Alternatively, a further rally in the market of GBPUSD is likely as long as the price is above the top of the MF sloping channel. If this is the case, we may well witness a move up to 1,7000. The scenario is represented by the green arrow.
