BOE delivered a 50 bps rate hike yesterday

GBP/USD Resumes Bearish Trend After the BOE Rate Hike

Posted Thursday, November 3, 2022 by
Skerdian Meta • 1 min read

GBP/USD has been bearish since early 2021 and the decline picked up pace in September, as UK gilt yields surged higher.  Although, the situation stabilized after the intervention from the Bank of England (BOE) and GBP/USD increased from 1.05 lows to above 1.16, where it met the 100 SMA (green). Some of that move came as the USD weakened, but the100 SMA stopped the bullish momentum in this forex pair and GBP/USD has reversed back down, facing the 50 SMA (yellow).

The USD made some decent gains yesterday after the 75 bps rate hike from the FED, as Jerome Powell left the door open for further such hikes. Today, it’s the turn of the BOE to increase interest rates by 0.75%, which will be the biggest hike since 1989. But, chances are that the BOE hints at slowing the pace, which would be bearish for the GBP and would send this pair diving lower.

GBP/USD Daily Chart – Buyers Failed at the 100 SMA

Will we see a break below the 50 SMA? 

Yesterday the UK Times published a piece suggesting that the UK Prime Minister Sunak and Chancellor Hunt are making preparations to extend the windfall taxes on Oil and gas companies.

Bank of England Statement

  • Bank rate may have to go up further but less than markets expect
  • If we do not act forcefully now, it will be tougher later
  • Rates on fixed-rate mortgages should not need to rise as they have done
  • GDP has been weaker than expected while labor market strong
  • Inflation has come in about as expected in August
  • There are some signs that labor demand has started to soften
  • MPC does not follow the market
  • We should not increase bank rate too far


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