BoE holds rates steady but its tone was more hawkish than expected
Source: www.tradingview.com
The Bank of England held the official bank rate at 5.25%, with Catherine Mann and Jonathan Haskel being the only two hawks favouring a 25bps hike. This is more hawkish than expected as general thinking was that the three hawks that voted in December would relent. Moreover, the statement indicated that the central bank was still concerned over the persistence of inflation, with the forecast for inflation pushing back against expectations for an early rate cut. The statement read that "Monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates."
GBPUSD did spike following the announcement but is still 0.21% down for the day with its daily RSI on the softer side of 50 (green rectangle).
The implied probability for a May cut is now 50%, down from just above 60%
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.