GBP: Peak dissent at the BoE – ING

FXStreet Insights Team FXStreet

Yesterday’s 25bp rate cut by the Bank of England had a clear hawkish tinge, ING's FX analyst Francesco Pesole notes.

Move above 1.35 in GBP/USD is very possible at this stage

"The MPC had to hold two rounds of voting for the first time ever to reach a 5-4 majority, as a larger-than-expected hawkish dissident faction emerged. On top of that, the BoE subtly hinted that the end of the easing cycle is approaching by saying: 'the restrictiveness of monetary policy has fallen as Bank Rate has been reduced'."

"Governor Andrew Bailey’s press conference wasn’t as hawkish, but given the significant upward revision in the inflation forecasts and downplayed jobs market concerns, the bear flattening of the yield curve and sterling’s rally are entirely justifiable. Another cut by year-end is now just 75% priced in. The other hot topic for this meeting was the reduction in quantitative tightening. The MPC published their estimate that QT added 15-25bp to back-end yields, which should keep expectations of a reduction in September alive."

"The large hawkish dissent places greater emphasis on future inflation prints. A more convincing moderation now appears necessary to have another 2025 cut fully back in the price. Sterling is therefore in a stronger position, even though the adverse fiscal story and EUR’s strength may prevent a EUR/GBP correction from running much further. Cable remains more appealing, and a move above 1.35 is very possible at this stage."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.