The move to 1.25% was expected by the markets but following hawkish surprises from the Fed and notably the SNB today investors might have hoped for a braver move.
Indeed the move was backed by 6 member while 3 member voted for 50bp hike but that’s just a minor consolation for investors. Bank expects inflation to hover above 9% and even reach 11% in October so rates at 1.25% look pretty low in comparison.
The move has not been well received by the markets. GBPUSD has immediately tumbled by the whole figure and trades at just 1.2050. Moreover, the pair has been in a free fall for a while and such approach from the BoE might not help stabilize matters, especially in the strong dollar environment.
Daily summary: Weak US data drags markets down, precious metals under pressure again!
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