GBP depreciated against its major rivals in the European session on Thursday after the release of the outcomes of the Bank of England's (BoE) latest monetary policy meeting.

At their June gathering, the BoE's policymakers decided to leave the bank rate unchanged at 0.10% and maintained the asset purchase program at GBP895 billion, as widely expected. The BoE’s chief economist Andrew Haldane was only looking at tapering bond purchases to GBP825 billion.

The central bankers also increased their Q2 GDP growth forecast by around 1.5%, adding that output in a number of sectors is now around pre-Covid levels. They also noted that the direct economic implications of recent delays in the final stages of the easing of coronavirus restrictions are likely to be relatively small compared with the impact of previous stages. The policymakers suggested that the UK’s economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth and inflation will fall back. It was also noted that the UK’s CPI inflation is likely to exceed 3% for a temporary period and that the near-term upward pressure on prices could prove somewhat larger than expected. However, inflation expectations remain well-anchored. The officials also reiterated they do not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.

The BoE’s statements disappointed market participants, who expected a shift to a more hawkish language, putting pressure on the pound.