A strong day for the Dollar which is up against major currencies, including the Euro and perhaps more surprisingly Sterling.
The Bank of England hiked rates 25bp to 0.75%. While this was in line with the consensus forecast and market pricing of 23bp of hikes there was arguably some doubt as to whether the BoE would hike rates for only the second time in a decade. Instead all nine MPC members voted for a hike and Sterling initially rallied versus the Dollar and Euro.
But very quickly Sterling sold off and is currently weaker than it was pre-meeting. It would seem that markets “bought the rumour and sold the fact” with the MPC seemingly struggling to convince markets that a second rate hike before end-year was likely. Indeed the outlook for UK growth remains cloudy due to Brexit-related uncertainty.
