GBP / USD: the pound broke even despite the Bank of England

The British pound remains in balance despite the Bank of England’s significant rate hike

The pound remained broadly in balance on Thursday despite the Bank of England’s largest rate hike since the 1990s. The BoE hiked rates for the sixth consecutive meeting, but this time by 50 basis points, bringing them back to their highest level since the 1990s. 2009. of inflation in progress, but the effect was not affected by the pound, penalized by the new forecast of the bank which foresees a recession of five quarters starting from the fourth quarter of the year.

The British economy is therefore expected to experience a long episode of stagflation, as at the same time “inflation is expected to remain very high in 2023”, according to the central bank. Bad news for the pound, but also for the risky assets most dependent on the British economy. Against this backdrop, UK large caps, which are more international, are more likely to outperform small and mid caps than the other way around.

The focus is now on the monthly US employment report released this afternoon in an equally uncertain economic environment across the Atlantic. The consensus predicts 250,000 new jobs in July, after 372,000 in June, and a 0.3% increase in average hourly wages.

GBP / USD Daily Price Chart – Key Levels

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