"One and Done" Rate Hike Triggers GBP Selling

A dovish rate hike from the Bank of England on Thursday has triggered a sell-off in the pound while yields on UK debt have also fallen.

We may be jumping to the wrong conclusions prior to the press conference with Mark Carney but the impression that the MPC has given is this is a "one and done" rate hike. Dropping the reference to the market under-pricing future tightening while at the same time referencing the market pricing in two rate hikes over the next three years doesn't suggest another rate hike is planned any time soon.

With inflation expected to return closer to target over the next 12 months, the chance to raise rates may not exist for long and policy makers were clearly keen to seize the opportunity while it still could.