Photo by Colin Watts on Unsplash 
 

GBP/USD climbed on Thursday, driven into the high side by over-extended bearish price action that has plagued the pair, as well as a surprisingly close Bank of England (BoE) vote on interest rate moves that gave investors hope that the BoE might be moving to support the UK’s flagging economy despite still-high inflation metrics.

The BoE’s Monetary Policy Committee (MPC) voted to keep interest rates on hold this week, a move that surprised functionally nobody within the investment community. What did come as a surprise was the distance (or lack thereof) between MPC voters voting to hold or cut interest rates. The BoE’s interest rate setting guild voted five-to-four to keep interest rates on hold until the MPC’s next interest rate decision, a notably tighter gap between holders and cutters than initially expected.

Central banks would typically be loathe to trim interest rates at a time when the UK’s national inflation rate has remained stubbornly high, near 3.8% since July. That figure is nearly double the top end BoE’s preferred inflation rate band, however, a lopsided economy and lagging growth metrics may be prompting the BoE to reconsider it’s primary focus.

This Friday would have seen the release of the US’s latest Nonfarm Payrolls (NFP), however, the longest US government shutdown in history has crimped the flow of official datasets. Investors have defaulted to paying additional attention to private data releases despite a tendency to produce volatile results on a release-to-release comparison. University of Michigan Consumer Sentiment and Consumer inflation expectations survey results are still due on Friday, and could take on additional weight for investors who are missing out on meaningful government-level inflation and labor metrics.

GBP/USD daily chart
 

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