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Bank of England Hikes Rates by 50bps,  GBP/USD Slips Lower on Vote Split

Bank of England Hikes Rates by 50bps, GBP/USD Slips Lower on Vote Split

Nick Cawley, Senior Strategist
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GBP/USD - Prices, Charts, and Analysis

  • BoE hike rates for the 9th consecutive meeting.
  • Two MPC members voted to keep rates unchanged.
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Most Read: GBP Breaking News: UK Inflation Declines Beating Estimates, GBP/USD Dips

The Bank of England (BoE) has raised interest rates for the 9th consecutive meeting as the UK central bank continues to battle with sky-high inflation. The BoE raised the bank rate by 0.50% to 3.50% today, a fresh 14-year high.

The MPC voted by a majority of 6-3 to increase Bank Rate by 0.5 percentage points, to 3.5%. Two members preferred to maintain Bank Rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

Cable fell by around 25 pips after the release on the vote split.

GBP/USD Price Chart– December 15, 2022

image1.png

Chart via TradingView

*** Updates to Follow ***

Bank of England comments

GDP is seen falling by 0.1% in Q4 2022 following a decline of 0.5% in Q3.

Most indicators of global supply chain bottlenecks have eased, but global inflationary pressures remain elevated.

The risks around the declining path for inflation were judged to be to the upside.

Domestic wage and price pressures remain elevated.

The majority of the Committee judges that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target.

For all central bank policy decision dates see the DailyFX Central Bank Calendar

Retail Traders Remain Net-Short

GBP/USD Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -9% 6% -3%
Weekly 14% -13% 0%
What does it mean for price action?
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Retail trader data show 37.42% of traders are net-long with the ratio of traders short to long at 1.67 to 1.The number of traders net-long is 7.60% lower than yesterday and 18.51% lower from last week, while the number of traders net-short is 8.22% higher than yesterday and 8.66% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.

What is your view on the British Pound – 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.

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