DollarBuddha

GBP: When a rate hike is More than just a number...

FX:GBPUSD   Pound British/Dolar U.S.
...Hello TV Traders...

I too, was somewhat puzzled by the large NEGATIVE reaction to this morning's BOE's rate hike...
At minimum, I expected a quiet "non-reaction" since the hike itself has been telegraphed by the BOE for weeks...

The best explanation I found came from Kathleen Brooks (as published on FXStreet.com):
- https://www.fxstreet.com/analysis/boe-decision-initial-thoughts-on-drop-201711021229

Her assessment was that this rate hike was NOT the start of a hiking cycle (ala US-Fed policy) but rather just a "one-and-done" deal...
An assessment bolstered by the BOE's own projection of ONLY two rate hikes over the next 2-3 years.
(...in many analysts' views, the BOE did a "Cover-Your-Ass" move to negate last year's emergency post-Brexit rate cut)

As such, traders/investors punished the GBP across all major currency pairs ( GBPUSD             , EURGBP             , GBPJPY             )

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So, what's the lesson in all the above..?
When trading the news, ALWAYS try to look beyond the headline numbers...
Sometimes, price action will seem "illogical", but that's only because there's a deeper logic to be found.

Wishing you Peace and Profits...

---$Buddha

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