Sterling weakened after the Monetary Policy Committee surprised economists who were expecting a "hawkish hold" on policy, by cutting its forecasts for near-term growth in the United Kingdom economy and for inflation. It fell another 0.2 percent Thursday to $1.3500.
While the bank suggested that the soft patch in growth would likely be temporary, and hinted a rate hike may still be possible later in the year, it failed to inspire confidence in investors.
Indeed, during the MPC's press conference, Ben Broadbent, the Bank of England's Deputy Governor for Monetary Policy, appeared to be adamant that the underlying message to markets had not changed.
"As it does, households, businesses and financial markets will adjust".
The BoE has already revised down its forecasts for 2018, said it expected economic growth would increase over the course of the year.
On Friday the currency rose 0.1 percent versus the dollar at $1.3533 and increased 0.1 percent against the euro at 88.090 pence.
Moreover, subsequent surveys of business and consumer activity showed little rebound in April - adding support to the view of Britain's statistics agency that the slowdown in first-quarter growth to 0.1 percent was largely unrelated to the weather.
The voting patterns remained the same with the same 7-2 split that we saw in March, however today's decision had a distinctly dovish slant to it, in that both the growth and inflation forecasts were downgraded for this year as well as next.
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The outlook for the interest rate path in the United Kingdom after May Inflation Report from the Bank of England sees even lower than 90 percent chance for the bank to move in November.
Archer noted that the MPC had indicated in its minutes that it believed growth in the first quarter was greater than the initial estimates, pointing towards an upward revision when more data becomes available to about 0.3 percent, which is in line with recent rates of growth.
"The Bank of England May Inflation Report says".
The bank expects inflation to ease back to 2.1 percent by this time next year and get to target in two years, provided the main interest rate rises to 1.1 percent in two years and to 1.2 percent in three years.
However, as with everything related to the British economy, much depends on the Brexit discussions.
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An agreed transition period that lasts until December 2020 could provide more time for the United Kingdom to redefine its trading relationship with the European Union, potentially smoothing economic shocks and buying time for policy makers to raise rates.