The Bank of England decided to leave the interest rate unchanged as expected and sent a dovish message. They still expect to raise rates but they were surprised by lower inflation and expect it to remain low. In addition, the dark clouds over Brexit weigh on the outlook. While Carney tried to sound more optimistic, it only helped the pound recover temporarily.
Then came the US inflation report. Core CPI came out at 2.1% YoY, below 2.2% expected. Other numbers also fell short. The initial reaction was a weaker dollar, but the greenback then recovered.
GBP/USD suffered a big fall from the highs of !.3617 to around 1.3470, nearly 150 pips.
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