BoE: A certain amount of hawkishness may be needed to prevent further USD gains – SocGen

Today’s main event is the Bank of England policy announcement. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes its implicates for the GBP/USD pair. 

Short-term rates market prices another 40 bps

“There’s near-unanimity that we’ll see a 25 bps hike to 4 ½%, and all the attention will be focused on the details and guidance that comes with that decision (assuming we don’t get a huge surprise).”

“The short-term rates market prices another 40 bps after today’s expected move, so a certain amount of hawkishness may be needed to prevent further USD gains, but if we get that, the market and Commentariat’s desire to see the UK economy (and currency) as a glass half full, rather than one that’s half empty, can carry GBP higher.”