Pound up ahead of BoE's first post-Brexit meeting

The pound climbed as the Bank of England kept interest rates unchanged, prompting speculation that the central bank may take a more careful approach in its measures to support the United Kingdom economy after the nation's vote to leave the European Union.

ANALYST TAKE: "We believe it is too early for the Bank to have any meaningful data on how the economy and financial conditions are being affected by the confidence shock ensuing from the EU referendum outcome, and therefore too early to calibrate the appropriate policy response", said Hetal Mehta, senior European economist at LGIM.

However, the minutes revealed that the Bank's agents around the country had detected that "some businesses are beginning to delay investment projects and postpone recruitment decisions".

But it said growth was likely to weaken in the near term as a result of the referendum and the BoE cut its forecasts for investment in the housing sector significantly while also lowering its expectations for house prices in the near term. "A composite gauge of economic uncertainty, which pulls together various measures of financial market, real economy and sentiment indicators has risen to its highest since 2011".

The Bank of England has surprised the City by leaving interest rates on hold at its first policy meeting since the United Kingdom voted to leave the EU.

The surprise decision to keep rates on hold pushed sterling to a two-week high against the United States dollar of $1.3480.

CURRENCIES: The euro was up 0.5 percent at $1.1156 while the dollar spiked 1.4 percent to 105.61 yen.

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"The precise size and nature of any stimulatory measures will be determined during the August forecast and inflation report round", it said.

Jeremy Stretch, an FX strategist at CIBC capital markets, has suggested there is pressure on the BOE to follow-through with Carney's pledge to cut interest rates at his June 30 speech.

At the same time low interest rates and the potential for further stimulus from a range of central banks continues to drive investors towards equities.

The comments come ahead of a decision by the central bank's Monetary Policy Committee on whether to stimulate the economy.

The U.K. now appears to be on a firmer political footing, with the new Prime Minister Theresa May taking office and appointing her cabinet today. Carney has already indicated that some sort of stimulus will be offered during the summer months as his pre-vote warnings about the impact on the economy had begun to crystallize.

"Following the European Union referendum results, some monetary easing might be required going forward", Carney had said without specifying when it would happen and what form the easing would take. Futures pricing before the announcement showed the chance of a rate cut at 86 percent, compared with 11 percent on June 23, the day of the nation's referendum. He did not rule out the possibility of an economic slowdown but said the new government would do "whatever is necessary to keep the economy on track".

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