The Bank of England (BoE) has raised interest rates for the 9th consecutive meeting as the UK central bank continues to battle with sky-high inflation. The BoE raised the bank rate by 0.50% to 3.50% today, a fresh 14-year high.

The MPC voted by a majority of 6-3 to increase Bank Rate by 0.5 percentage points, to 3.5%. Two members preferred to maintain Bank Rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

Cable fell by around 25 pips after the release of the vote split.

GBP/USD Price Chart

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Chart via TradingView
 

Bank of England comments

GDP is seen falling by 0.1% in Q4 2022 following a decline of 0.5% in Q3.

Most indicators of global supply chain bottlenecks have eased, but global inflationary pressures remain elevated.

The risks around the declining path for inflation were judged to be to the upside.

Domestic wage and price pressures remain elevated.

The majority of the Committee judges that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in the Bank Rate may be required for a sustainable return of inflation to target.
 

Retail Traders Remain Net-Short

Retail trader data show 37.42% of traders are net-long with the ratio of traders short to long at 1.67 to 1. The number of traders net-long is 7.60% lower than yesterday and 18.51% lower than last week, while the number of traders net-short is 8.22% higher than yesterday and 8.66% higher than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.

What is your view on the British Pound – bullish or bearish?

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