GBPUSD plummets as traders digested BoE hike

GBPUSD pair fell over 200 pips today as investors digested the latest BoE decision to hike interest rates by 50 bps to 3.5%, a 14-year high.  This move was already priced in by the market and the decision itself was not unanimous, with two policymakers pushing to keep the bank rate unchanged, indicating that central bankers are noticing the fact that tightening conditions have a negative impact on the economy. Today's rate hike follows a cooler-than-expected CPI print earlier this month, showing that inflation in the UK slowed to 10.7% in November from the 41-year high of 11.1% in the prior month and some investors expect that BoE will lose the tightening process. Meanwhile yesterday's Fed lifted rates by 50 bps as expected, however upward revision in interest rate projections strengthened the US dollar.

GBPUSD pulled further away from recent highs at 1.2450 and if current sentiment prevails, support at 1.2150 may be at risk. Source: xStation5