Bank of England Deputy Chairman Ben Broadbent said the decision to keep interest rates unchanged came from the uncertainty in the labor market. In particular, the sharp increase in wages raised concerns, as it could significantly impact inflation. Pound continued to decline since it seemed that the central bank could do everything for the sake of price stability, even sacrificing economic growth.
However, recent data suggests that the pace of wage growth, both with and without bonuses, slowed, and inflation eased even amid rising wages. This suggests that the Bank of England may not have many reasons to worry, and the decision to keep interest rates unchanged may be because of similar actions by the Federal Reserve and the European Central Bank.
Another Bank of England representative will speak today, but it may not change the impressions from yesterday's statements. The practically empty macroeconomic calendar may also provoke market players to try consolidating around the achieved values.
Such a scenario may be seen in euro as well, despite the inflation data being published. The report will confirm the preliminary assessment, so it will not have any impact, unless they significantly differ from those published two weeks ago.
EUR/USD fell by 100 pips from the resistance level of 1.1000. It currently trades around 1.0900, where the volume of short positions decreased. Failing to stay below this level will mean that the correction ended, so euro will rise soon. But if the correction continues, the pair will decline to 1.0850.
GBP/USD lost 150 pips. Even so, the trend remains bullish, and a return above 1.2700 will likely prolong its condition.