The British Pound has been back in demand today following yesterday’s hawkish BOE meeting. While the central bank stuck to the signalled .25% hike, refraining from a larger .5% increase, the bank signalled that further tightening was likely coming in August. Indeed, with inflation at record highs, the BOE signalled that further tightening might be necessary. On the back of the meeting, the rates market is now pricing in a larger .5% hike in August, at which point the BOE will update its economic forecasts. Looking further out, markets are anticipating further hikes with rates projected to end the year atop 3%.Upside risks in the outlook are clear, with the BOE noting that it “would be particularly alert to indications of more persistent inflationary pressures, and would if necessary, act forcefully in response.” Given the softer rate hike at this juncture, traders now anticipate that the BOE will need to keep hiking throughout the remainder of the year in order to tame inflation.Technical ViewsGBPJPYThe correction lower from the 163.18 level has seen GBPJPY finding solid demand at the 159.98 level and turning higher once again. With the retail market around 70% short there is plenty of room for GBPJPY to continue higher here. 168.39 is the key upside level for bulls to watch, should price break above there 175.01 is the target.
Source: Tickmill
