BoE Hikes As Retail Sales Also Beat
For the second time in two months the Bank of England caught markets by surprise. The MPC voted 8-1 in favour of raising the Bank rate by 15bps to 0.25%. The BoE hiked in response to surging inflation, which is now expected to peak at 6% next April and further tightening in the labour market. The decision saw sterling rise sharply in the immediate aftermath.
Currencywise, moves over the last 24 hours seem to have reflected some gains for both the euro and sterling against the dollar. EUR/USD changes hands above the 1.13 handle, GBP/USD operates in and around the $1.33 whilst the EUR/GBP trades over the 1.1750 mark and similar to yesterday’s open.
Datawise, and already released this morning, UK retail sales have printed better than expected, rising by 1.4% against 0.8% forecasts in November. Later today, the German Ifo (Dec) is the other main release. However, barring any major surprises, the data is unlikely to impact the market too much.