ICYMI:
- ECB leaves key rates unchanged in February monetary policy meeting, as expected
- ECB's Lagarde opening statement: Inflation to remain elevated for longer than expected
- Lagarde Q&A: Inflation surprises causes unanimous concern on governing council
- ECB sources: Sizeable minority wanted to chance policy today
- ECB sources: Officials believe it's sensible not to exclude a 2022 rate hike
- BOE raises bank rate by 25 bps from 0.25% to 0.50%
- BOE's Bailey: There is a debate on whether to move gradually or do a larger move to send a message
- BOE's Bailey: It made sense for the BOE to move in 25 bps increments
- More from Bailey: We are not behind the curve
- Bank of Englad Governor Bailey says the quiet part out loud
Remarks from MUFG on where to now for GBP (via eFX
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"The initial market reaction of a jump in yields to the 25bp rate hike by the BoE reflected the focus on the surprise 5-4 vote with four MPC members voting for a 50bp hike implying more front-loaded action..But we argue that the explicit guidance in the statement and the implicit guidance in the Monetary Policy Report were more dovish...We believe the sharp undershoot of inflation relative to target in 3yrs time will help contain rates and limit the potential for GBP strength," MUFG notes.
"We do not envisage GBP breaking sustainably to the upside on the back of this MPC announcement. Any gain from the current spot rate toward the 1.4000 level versus the US dollar is unlikely to be sustained while the increased hawkishness of the ECB with high anticipation ahead of the ECB meeting on 10th March means a low in EUR/GBP just below 0.8300 may now have been established for the coming months," MUFG adds.
Weekly candles EUR/GBP:
