Event Studies Show GBP Weakness On A BoE Rate Hike

By Staff of Seasonax

Seasons, Patterns & Cycles • May 9, 2023 at 6:15 AM EDT

Short-term interest rate markets are pricing an 84% chance of a 25bps rate hike from the BoE and another hike in the summer.

Stock, Trading, Monitor, Business, Finance, Exchange

Image source: Pixabay

Short-term interest rate markets are pricing an 84% chance of a 25bps rate hike from the BoE and another hike in the summer. The UK is fighting headline inflation still in the double digits and the core is at 6.20% y/y, so all is well above the UK’s 2% inflation target. Now these expectations for the BoE to hike on Thursday’s meeting have been growing for some time, so how will the GBP react? Interestingly the GBPUSD shows a clear bias leading into and out of BoE rate hikes. Over the last 15 years, when the BoE has hiked rates, the GBPUSD has fallen an average of 1.01% on the day before and after the meeting. This hike has been well expected by markets, so will we see the GBP weaken out of the decision on Thursday?

Major Trade Risks: The major trade risk here is if the BoE signal even higher rates to come as that will surprise markets and likely send the GBP even higher.

Video Length: 00:02:01

More By This Author:

Gold To Rise Into The US CPI Print?
Do Event Studies Show Gold Primed For A Breakout?
Apple’s Seasonals Ahead Of Earnings

Disclaimer:

Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.

Comments

Back to all articles