NAB Research discusses the reaction to today's BoE policy meeting in which MPC voted to maintain the Bank Rate at 0.50% and the stock of purchased assets financed by the issuance of central bank reserves at £435 billion.
"The BoE has communicated a step-change in its view that UK rates are headed higher,..it’s probably safer to pencil in the next hike for the August meeting and leave a May hike as the risk. Then another hike to 1% in November 2018," NAB argues.
"One word of caution here: Today’s price-action in FX is indicative of a market that is being driven by sizeable order-flow and position-adjustments perhaps related to the broader financial market gyrations of the last few days and hence it may be perilous to draw definitive conclusions to why various currencies have moved the way they have.
It may take a few days for markets to settle," NAB warns.