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Bank of England Hikes Rates by 0.25%, GBP/USD Slumps

Bank of England Hikes Rates by 0.25%, GBP/USD Slumps

Nick Cawley, Senior Strategist
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GBP/USD Price, Chart, and Analysis

  • BoE raises interest rates by 25 basis points.
  • GBP/USD fell sharply after the announcement.
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The UK central bank raised interest rates by 25bps today to 0.75%, pushing borrowing costs back to pre-pandemic levels. The committee voted 8-1 for the move with one member preferring to maintain the bank rate at 0.5%. The BoE now expects inflation to reach 8% in Q2, ‘and perhaps even higher later this year’. The UK central bank also believes that developments since the February Report - the Ukraine crisis – will have an ‘adverse impact on activity by intensifying the squeeze on household’. It looks like the BoE is pushing back against aggressive money market rate hike predictions, giving the release a more dovish overtone.

Bank of England Minutes

The Federal Reserve Bank began hiking interest rates at yesterday’s FOMC meeting, raising rates by 25 basis points, the first move higher by the Fed since late 2015. Financial markets are now expecting the Fed to increase rates by 25bps a further six times this year with four more rate hikes seen in 2023.

FOMC Hikes – USD Spikes, SPX Snaps, Bring on The Presser.

For all market-moving economic data and events, refer to the DailyFX calendar

Today’s decision disappointed traders who had bid GBP/USD up to 1.3200 just before the announcement. Cable is now pushing down on 1.3100

Becoming a Better Trader – Fixing Mistakes, Working on Weaknesses.

GBP/USD 3 Minute Price Chart – March 17, 2022

Retail trader data show 73.68% of traders are net-long with the ratio of traders long to short at 2.80 to 1. The number of traders net-long is 5.08% lower than yesterday and 8.44% higher from last week, while the number of traders net-short is 1.89% higher than yesterday and 2.86% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

GBP/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -19% 34% 4%
Weekly -29% 42% 0%
What does it mean for price action?
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What is your view on GBP/USD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.