Headlines:Sterling tumbles as BOE paints dire outlook on UK economyBOE raises bank rate by 25 bps from 0.75% to 1.00%, as expectedBOE’s Bailey: Risks to inflation are skewed to the upsideOPEC+ reportedly agrees to stick with existing oil output policyOPEC+ JMMC reportedly recommends sticking to existing oil output policyECB’s Lane: Unlikely to revert back to pre-pandemic inflation trendECB’s Lane: Exact timing of rate hike is not the most important issueECB’s Panetta: It would be incautious to act on rates before seeing Q2 dataUK April final services PMI 58.9 vs 58.3 prelimGermany March factory orders -4.7% vs -1.1% m/m expectedUS April Challenger layoffs 24.29k vs 21.39k priorSwitzerland April CPI +2.5% vs +2.5% y/y expectedMarkets:USD leads, GBP lags on the dayEuropean equities higher; S&P 500 futures down 0.6%US 10-year yields up 2.9 bps to 2.944%Gold up 0.9% to $1,897.50WTI up 0.8% to $107.10bitcoin down 0.9% to $39,461The post-FOMC moves yesterday are retracing back slightly as the dollar firmed, bond yields crept higher and US futures are marked lower in European morning trade. But the pound is the big mover as it crumbled amid a dovish rate hike by the BOE, with the central bank painting a rather bleak picture of the UK economy moving forward.Stagflation risks are what stands out as policymakers predict 10% inflation this year with the economy contracting at the end of the year and grinding to a halt in the early stages of next year.That is enough to drag the pound to fresh lows since July 2020 as cable tumbled from 1.2540 to below 1.2400 currently.Meanwhile, there is still some debate to the peak hawkishness message from the Fed yesterday as markets scaled back on the post-FOMC moves. EUR/USD moved down from 1.0600 to 1.0550 while USD/JPY jumped up from 129.30 to near 130.00 again currently.AUD/USD also gave up gains from around 0.7240 in a fall to 0.7190 at the moment.This comes as bond yields are staying higher with 10-year Treasury yields still lingering just below the key 3% mark.Elsewhere, stocks are also looking more guarded with US futures holding lower once again as yesterday’s late spark may yet prove to be fleeting.

But when inflation falls, it will fall rapidlyUK inflation is well above target in the near-term, but will subsequently fall below targetNo decision made on whether to have active sales of government bonds held by the BOEBOE forecasts do not meet technical definition of a recession but it is a very sharp slowdownOn the dire outlook to the economy, he is mainly playing with semantics. You don’t forecast zero growth without warning of recession risks that may befall the economy, not least in this environment. The pound is continuing to fail to find much comfort as the technical break in cable now starts to threaten the 1.2400 level.

Well, they are the first major investment bank to be calling for parity in EUR/USD. On the revision, the firm argues that:“The euro has already faced more downward pressure than we expected, but we find it hard to see a silver lining for the single currency at this stage. We therefore change our forecasts to reflect a more bearish view, and see euro-dollar moving to parity in the year ahead.“