BoE Interest Rate Decision Leaves GBP Steady Against EUR

The British Pound (GBP) maintained its stability against the Euro (EUR) as the Bank of England's (BoE) monetary policy decision left interest rates unchanged at 3.75%. The EUR/GBP pair traded flat on Thursday, hovering close to its highest level in nearly a month.

According to the BoE's statement, 'the impact of the energy shock on the UK economy remains uncertain.' Despite this uncertainty, Governor Andrew Bailey emphasized that monetary policy cannot influence energy prices but is being set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably.

The BoE's decision was met with a 6-3 vote, with all members agreeing that energy-price risks were tilted to the upside. However, three members who backed a 25-basis-point hike argued that uncertainty over the conflict remained high and believed a proactive rate increase would reduce the risk of second-round effects setting in.

The Euro failed to draw support from stronger-than-expected Eurozone data, including preliminary Gross Domestic Product (GDP) expansion of 0.4% QoQ in the second quarter, beating expectations of 0.2%. German inflation also came in hotter than expected.