European session review: GBP strengthens after the announcement of BoE’s monetary policy decisions

GBP rose against its major rivals in the European session on Thursday after the announcement of the outcomes of the Bank of England's (BoE) latest monetary policy meeting.

At its February meeting, the BoE's policymakers decided to leave the bank rate unchanged at 0.10% and maintained the asset purchase program at GBP895 billion. They also said that the outlook for the economy remained unusually uncertain, but the rollouts of the Covid-19 vaccination program had improved it. GDP is projected to recover rapidly towards pre-virus levels over 2021, the BoE's officials added. 

At the same time, the central bankers warned that preparations for negative interest rates should begin, but added that this message shouldn’t be taken as a signal that the policy is imminent. According to the letter from the BoE's deputy governor Sam Woods, who heads the Prudential Regulation Authority (PRA), consultations with banks found that the implementation of the negative rates within six months would pose heightened operational risks and could adversely impact some firms’ safety and soundness. This statement raised investors' bets that sub-zero rates are not to come any time soon.