GBP / USD: Bank of England passes the baton to the EU summit

The current week was eventful for the GBP / USD pair in the background of the Fed, the Bank of England, and the EU Brexit summit.

Despite the sharp weakening of the dollar, the British currency ended the day with a pullback to 1.32 support. The pound traders appeared to be disappointed that British Prime Minister Theresa May asked Brussels for a short-term postponement of the extreme date of the country's withdrawal from the EU.

If it were not for the "soft" comments of the Fed following the next meeting, which ended yesterday, the loss of the pound within the day could have been more substantial.

Today, the GBP/USD pair was unable to grow on the recovery attempt and continued to decline to 1.31.

Pressure on the pound is still exerted by the continuing uncertainty around the exit of the United Kingdom from the EU.

Considering how late London's official request to postpone Brexit was made, EU members are unlikely to be able to take any decision on this matter at the next meeting of the European Council.

Earlier, the President of the European Commission, Jean-Claude Juncker, allowed the possibility of convening an emergency EU summit next week (until March 29) to decide whether to approve the UK's request for an extension of Article 50 of the Lisbon Treaty.

At the same time, the best options in Brussels are either to consider the postponement of Brexit until May 23, 2019 before the elections to the European Parliament or for a year.

In addition, the EU is unhappy that there is no agreement between the government and the British Parliament and they question the fact that Theresa May will be able to reach a consensus in the next 2 months.

If the British Prime Minister can not provide Brussels with assurances that the Brexit deal will eventually be accepted by the House of Commons, the renewal request is likely to be rejected.

Meanwhile, all these events look unfavorable for the Bank of England, which is forced to leave without attention the fact of wage and consumer price growth in the country in favor of the continuing uncertainty over Brexit.

Following the results of the next meeting, which took place today, the regulator decided to leave the base interest rate at the level of 0.75% again and at the same time, they confirmed the volume of assets repurchase from the market in the amount of 435 billion pounds sterling.

Additionally, the management of the Bank of England reported that further changes in interest rates would depend on the Brexit process and the next step for the Central Bank could either be raising or lowering borrowing costs.

It is assumed that the emergence of new reasons for postponing Brexit will be positive for the pound. At the same time, you should not finally write off the possibility of the United Kingdom's exit from the EU without a deal, which could turn into a failure for the British currency.

The material has been provided by InstaForex Company - www.instaforex.com