Polish
English
German
French
Portuguese
Italian
Czech
Slovak
Vietnamese
Polish
The Bank of England (BoE) raises rates, the pound strengthens
At the December meeting Bank of England (BOE) unexpectedly raised interest rates by 15 basis points (bp) to 0,25%. This was due to the good situation on the British labor market (the number of vacancies is the highest in history) and rapidly rising inflation, which, as shown by the data published on Wednesday, shot up from 4,2% in November. year on year to 5,1%, significantly exceeding market expectations of 4,7%.
The market did not expect an increase
The bank's decision surprised the market. Economists forecasted that the rates would remain unchanged at the December meeting, and the Bank of England would not start raising them until the first quarter of 2022. Behind such expectations was the uncertainty caused by the ongoing fourth wave of the pandemic in Europe and a new variant of the coronavirus (Omikron). However, the bank decided that it went against such thinking and recognized that the pandemic situation could lead to further increase in inflationary pressure in the UK. Hence, he decided to raise the rates.
The decision to raise interest rates was almost unanimous. 8 out of 9 bank representatives voted for it. This means that the door to further rate hikes is now open. Even before the December meeting of the BoE, it was forecast that the rates in the UK would be raised at least twice and the main rate would return to 0,50 percent.
The surprising hike strengthened the pound against the currency basket. Including to the US dollar.
GBP / USD chart, H4 interval. Source: Tickmill
GBP / USD chart (H4), which broke the 10-month downtrend line on December 1,5 and broke the triangle high this morning, surged strongly, confirming this morning break and the previously generated downward to upward trend signals. This opens the way for further increases. The first serious resistance is the zone of $ 1,3494-1,3514, which is formed by 50 percent. the abolition of earlier declines and the local high from November 18. This is currently the target for GBP / USD.
