Will the Bank of England raise rates by 0.25% or more? Market participants are watching the pound’s movements closely.

Will the Bank of England raise rates by 0.25% or more? Market participants are keeping a close eye on the pound’s movements.

22.06.2023

In the previous day’s U.S. currency trading, the U.S. dollar rose against the yen after Federal Reserve Chair Powell stated during his congressional testimony that “we are currently far from our inflation target, and it is reasonable to continue raising rates at a gradual pace,” adopting a hawkish stance consistent with the FOMC.The USD/JPY pair rose by approximately 100 pips from 141.282 to 142.368, setting a new high for the year. Given that yesterday’s rise brought the pair to the 61.8% Fibonacci retracement level on the daily chart, we will be watching closely to see if it enters a correction phase.

Among European currencies, the pound traded in a tight range against the yen ahead of today’s BOE policy rate announcement. Yesterday, the UK’s May CPI was released, and the core index rose to 7.1% year-on-year from 6.8% the previous month. This caused the pound to rise by about 80 pips immediately after the release, but it then fell back for four consecutive hours, eventually dropping to 1749.922.While a rate hike to 4.75% is expected at today’s BOE meeting, we need to be cautious about whether the pound will fall following the announcement.

Today, the Swiss National Bank (SNB) will announce its policy rate and statement at 4:30 p.m., followed by remarks from U.S. Federal Reserve Governor Waller at 5:00 p.m., the Bank of England (BOE) policy rate and statement at 8:00 p.m., the Turkish Central Bank (TCMB) policy rate and statement at 8:00 p.m., and remarks from German Bundesbank President Nagel at 9:00 p.m.at 9:30 PM, U.S. initial jobless claims and the U.S. first-quarter current account balance; at 10:55 PM, remarks by U.S. Federal Reserve Governor Bowman; at 11:00 PM, U.S. existing home sales and testimony by U.S. Federal Reserve Chair Powell; and at 11:30 PM, U.S. weekly natural gas inventories, followed by U.S. weekly crude oil inventories at midnight.We need to remain highly vigilant regarding whether the Bank of England will raise rates by 0.25% or more, as well as the results of these economic indicators and market movements.