Good morning,

The Bank of England is convening for the first time this year, in what could be a volatile day for currency markets.

As covered in yesterday’s update, the Bank is widely expected to raise the base rate by 25 basis points, taking it to 0.50%. A secondary expectation is for quantitative tightening to commence, where the balance sheet gradually gets reduced.

As this is largely priced in, any deviation from this scenario could trigger a GBP sell-off. There could even be a ‘buy the rumour, sell the news’ event if profits get booked which are in line with expectations.

Market participants will also be listening out for any hawkish or dovish comments coming out of the Monetary Policy Committee. Any indication on the pace of further interest rate hikes later this year could provide fuel for GBP to strengthen or weaken.

Have a great day.

Thomas De Caluwé, Relationship Manager.

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