Title: GBP/USD braces for biggest BOE rate hike since 1995 around mid-1.2100s on “Super Thursday”
August 4, 2022 01:20 AM ET
GBP/USD reflected cautious sentiment ahead of the Bank of England's (BOE) monetary policy announcement early in the European morning on "Super Thursday." In addition to the unease ahead of the BOE announcement, a lack of market activity ahead of Friday's U.S. Nonfarm Payrolls (NFP) data and mixed catalysts from the U.S. also limited the cable pair's recent movement.
Reuters reported ahead of the BOE announcement, "The Bank of England is expected to raise interest rates on Thursday by the most since 1995, even as risks of recession rise, to prevent a surge in inflation from taking hold in the U.K. economy." It is worth noting that economic conditions in the United Kingdom are fragile, and political jitters and Brexit issues are increasing pressure on the "Old Lady," as the British central bank is known.
According to the Financial Times (FT), late Thursday U.K. Prime Minister Liz Truss mentioned that she wanted to change the Bank of England's mandate to ensure it controls inflation. Given Truss' leading position in the race for U.K. prime minister, the BOE could move aggressively this time. However, it will be more important to watch the central bank's future moves and economic forecasts for a clear direction.