The Bank of England held interest rates at 0.75% following the latest policy meeting, in line with consensus forecasts.

The dollar continued to gain ground as market expectations over a 2019 interest rate cut continued to fade following Wednesday’s less dovish rhetoric from Fed Chair Powell. EUR/USD dipped once again after failing to hold 1.1200.

Oil prices declined sharply amid concerns over increased US production and higher inventories. Commodity currencies remained under pressure, especially given the decline in energy prices with AUD/USD testing support below 0.7000.

Sterling was little changed overall as the Bank of England continued to forecast gradual interest rate increases over the medium term.

Scandinavian currencies remained under pressure with the slide in oil prices undermining the Norwegian krone while USD/SEK hit a fresh 17-year high.

Precious metals remained under pressure with gold re-testing 2019 lows.

The UK PMI construction index increased to 50.5 for April from 49.7 previously with a slight expansion in output. Further strength in the residential sector was offset by commercial weakness and overall business confidence remained fragile.

The Bank of England held interest rates at 0.75% following the latest policy meeting, in line with consensus forecasts, and with a unanimous vote. According to the bank, domestic demand is likely to be subdued in the short term due to Brexit uncertainty before recovering while excess demand was likely to build over the medium term. Inflation forecasts were mixed with increased pressure in the short term before a retreat by the second quarter of 2020 while medium-term projections were increased slightly. Wages growth forecasts were raised slightly and the bank remained committed to gradual and limited interest rate increases.

Sterling dipped after the statement but recovered some ground as Governor Carney stated that rates would need to rise further than implied by current market rates assuming a smooth Brexit process.

With local elections taking place, there were no Brexit developments. GBP/EUR rose to the 1.1665 area while there was a GBP/USD retreat to lows just below 1.3020 on US gains before a marginal recovery.

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