Bank of England Decision Leads to Cable's Plummet to Lowest in Two Weeks

Thursday, 21 March 2024, 15:30

Following the Bank of England's decision, market-implied odds of a rate cut have increased, pushing GBP/USD to its lowest point in two weeks. BOE Governor Bailey's remarks hint at potential rate cuts in the near future, contributing to broader US dollar strength which has adversely affected the currency pair. The recent upside breakout now appears to be invalidated amidst the market uncertainty.

https://store.livarava.com/6a780476-e798-11ee-968f-5254a2021b2b.jpe — Bank of England Decision Leads to Cable's Plummet to Lowest in Two Weeks

Market Implications of BOE Decision

A June Bank of England rate cut is increasingly seen as the base case as market-implied odds rose to 75% today from 60% following the BOE decision.

Out to year-end, the market sees 70 bps in cuts.

Bailey said that even though they aren't there yet on rate cuts, things are moving in that direction. He also said it's reasonable that markets are pricing in rate cuts this year.

The shift and broader US dollar bids today have undermined GBP/USD, putting an outside day on the chart. The pair now trades at the lowest since March 3 and the recent upside breakout looks to be invalidated.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.

Market Implications of BOE Decision

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