FTSE 100 rises as BoE holds rates, GBP weak, crude lower By Investing.com

Key Points

• FTSE 100 closing price of 7074.30, +0.5%
• Bank of England slows pace of asset purchases, interest rate on hold
• GBP falls as BoE signals no intention to tighten monetary policy soon
• John Laing shares jump after takeover interest
• Oil edges lower
• Cryptos mixed: Doge drops, Ethereum jump

By Samuel Indyk

Investing.com – The FTSE 100 closed at a 14-month high on Thursday after the Bank of England’s latest decision on monetary policy.

The central bank decided to slow the pace of asset purchases slightly, although they made it clear this was an operational decision and not a change in the monetary policy stance. The Monetary Policy Committee voted 9-0 to keep rates unchanged and 8-1 to keep the total stock of assets purchased unchanged.

Outgoing chief economist Andy Haldane was the loan dissenter, preferring to lower the total amount of assets purchased by £50bln.

Despite what appeared an initially hawkish decision (QE taper, hawkish dissenter, upgraded growth forecasts), GBP weakened post the decision as markets digested comments in the report and Governor Bailey’s press conference. Interest rates are not expected to increase any time soon and the central bank appears comfortable to look through any temporary rise in inflation.

“The Bank of England has reasserted it is fairly relaxed about the prospects for inflation and so feels little pressure to raise interest rates,” said AJ Bell financial analysts Laith Khalaf. “It will also attribute a higher weight to downside risks to its projections when deciding the path of monetary policy, which means they will err on the side of lower rates.”

GBP/USD dropped back below 1.3900 following the decision while EUR/GBP briefly touched 0.8700 before finding resistance at the big figure and paring back slightly.

WTI and Brent crude futures traded with small losses after hitting eight-week highs during yesterday’s trading session. Some are viewing Thursday’s drop as a technical correction after Brent failed to breach $70 per barrel while others are pointing to the likely demand hit stemming from India as Covid cases continue to increase.

In the cryptocurrency sphere, everyone’s favourite cryptocurrency Dogecoin pared some of its recent gains as markets await Elon Musk’s weekend appearance on Saturday Night Live. Bitcoin was relatively steady but Ethereum reclaimed $3,500 to trade at another all-time high.  

In individual stocks news, John Laing (LON:JLG) shares rallied to the top of the FTSE 250 after the company announced it was in discussions with KKR who is interested in a takeover of the infrastructure investor.