Bank of England goes for 50bps – has it done enough?
Seven out of the nine voting members decided a half point rise in base lending was justified taking benchmark rates to 5%. IGTV’s Jeremy Naylor says while it’s causing more pain for debt holders, it will see savers benefit.
Jeremy chats to Daily FX’s Richard Snow, who still believes there are more rate rises to come and the next may be at the next meeting.
(Video Transcript)
The Bank of England
So the Bank of England delivered 50 basis points of upside in interest rates, taking the base lending rate from four and a half to 5%. And of the nine voting members, seven voted for that 50-basis-point increase, so it was a concerted move by the Bank of England to deliver higher interest rates.
It means higher mortgage rates are coming down the pipe, but it also means higher savings rates. Let's take a trade out of this now as we turn to Richard Snow from DailyFX. Rich, what have you got?
Hi, Jeremy and surprisingly, I'm looking at cable. We've been seeing quite a bit of volatility in the daily price action there, and we're looking at a potential close above this bullish flag setup if we are to see that. Well, that could suggest that, you know, bullish continuation plays are still on track.
If that is to be the case, looking at upside resistance at the psychological level of 1.3. I think the immediate concern after the announcement was that if the recession concerns and issues of higher mortgage rates were to factor into the economy, we would actually be seeing a move lower in the GBP.
But as things stand, we are on track for a green candle close today, which could signal further bullish continuation.
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