The British pound is slightly lower in Friday trading. It has been an excellent week for GBP/USD, which has gained 1.26%. If the pound can maintain these gains during the day, it will mark the currency’s best weekly showing since December 2020.
BoE Raises Rates By 0.25%
As was widely predicted, the BoE raised rates by 0.25% at Thursday’s meeting. This brought the key rate 0.50% and was the first back-to-back rate hike since 2004. This didn’t make much of an impression on the markets, as the pound rose only slightly after the meeting.
What was surprising about the decision was that four of the nine MPC members voted to raise rates by 0.50%, which would have marked the biggest rate hike by the BoE in over 25 years. The large minority shows just how hawkish the BoE has become in recent months.
Governor Andrew Bailey stated that the markets should not assume that the BoE planned a series of rate hikes, but it’s questionable whether investors will pay close attention to his message. Bailey has a credibility problem after surprising the markets with his rate decisions late last year, and the tight 5-4 vote at the meeting shows significant dissension concerning BoE monetary policy.
GBP/USD Technical Analysis
- GBP/USD faces resistance at 1.3648 and 1.3740
- There is support at 1.3522 and 1.3440
