Cable falls to two week lows as BOE cuts growth forecast
GBP/USD slumps to its weakest levels since 22 January
The dovish message by the central bank is what is weighing on the quid at the moment with the quarterly inflation report showing cuts to its growth forecasts for this year and next in the wake of "intensified" Brexit uncertainty.
That said, I wouldn't expect a massive selloff in the pound here. As mentioned earlier in the preview, the dovish tone may send the currency a peg or two lower but in reality, nothing will really change until there is more clarity on Brexit developments.
The key takeaway for me is that the BOE maintained their language on rate hikes by saying that it would be appropriate to do hike at a "gradual pace and limited extent" if things proceed smoothly with Brexit.
Sure, the lower forecasts and everything means that the central bank is likely to just hike rates once this year instead of multiple times, if things go their way that is. But that is exactly what markets have assumed or was looking to price in/out anyway.
For cable, price is now running into support levels close to 1.2850 from the 21 to 23 January lows. That should hold up the pair for now until we hear more from Carney. In either case, if the pound is to dip further here, I'll be looking towards no-deal Brexit pricing more than anything else. The BOE and Carney (later) isn't offering anything new here.