GBP weakened after the Bank of England's decision. Overview for 12.05.2023

The British pound looks weaker against the US dollar on Friday. The GBPUSD pair is currently quoted at 1.2528.

The Bank of England decided at its May meeting to raise the interest rate to 4.50% per annum from 4.25% previously. The decision was agreed by seven votes out of nine.

The BoE commented that inflation risks had shifted upwards. This means that the rate will rise again at the June meeting, and possibly in August. Inflation will fall to 5.12% by the fourth quarter of 2023 and 3.38% a year later, with both figures significantly higher than the February forecasts.

The Bank of England expects zero economic growth in the first and second quarters of 2023. Overall, economic growth might increase by 0.25% this year and by 0.75% in 2024.

The central bank intends to adjust the bank rate, as necessary. In making decisions on the rate, the regulator will be guided by actual data.

Interestingly, it is worth noting that the Bank of England does not believe past monetary policy is responsible for high inflation. 

The pound has fallen because the Bank of England is indecisive. The market would like to see brighter and more serious decisions, but the regulator remains conservative.