Let’s try to keep this short and simple.

• There was a bump to the inflation forecasts and more notably, a big bump to GDP forecasts as well as the BOE abandoning their call for a UK recession
• The forward guidance reads more or less the same i.e. the door is still open to tighten further should inflation pressures require the need to do so
• The decision in itself was very much expected, that being a 25 bps rate hike with the same two dissenters again i.e. Dhingra and Tenreyro

So, where does that leave us?

Essentially, it shouldn’t be enough to convince markets to go above 5.00% pricing in the terminal rate. And with traders already having priced in a peak relatively close to that, the hawkish elements in today’s statement are not likely to provide too much of a boost to the pound.

We have seen GBP/USD move up from 1.2575 to 1.2600 now but to get past its one-year highs around 1.2660-66, I reckon it might take more and also a little bit of help from the dollar side considering today’s price action.

In terms of rates pricing, we have seen a minor bump higher in the OIS curve but not as hawkish as what we saw after the UK CPI data last month:

This article was written by Justin Low at www.forexlive.com.