GBP/USD surges above 1.3600 after anticipated 25bps BoE hike, as minority of members call for larger move

• Four of nine MPC members voted for a 50bps rate rise. 
• Cable is now pushing on towards resistance in the 1.3650 area as focus shifts to the BoE’s post-meeting press conference. 

GBP/USD leapt above 1.3600 in wake of the latest BoE rate decision, where, as expected, rates were lifted by 25bps to 0.5% and QE reinvestments were halted. The bullish impulse appears to have come from the fact that four BoE Monetary Policy Committee (MPC) members voted for a larger 50bps hike that would have taken rates to 0.75%, thus substantially raising the risk of a further rate rise at the BoE’s next meeting. The bank also voted to reduce the size of its corporate bond holdings (currently £20B) to zero by the end of 2023 through non-reinvestments and active sales. The hawkish surprise sent UK yields surging, with the 2-year up 8.5bps to above 1.12% and the 10-year up nearly 10bps to 1.35%. 

The net result for sterling is that it now sits at the top of the G10 performance table on the day, with GBP/USD currently trading about 0.3% higher in the 1.3615 area. Having now cleared resistance in the form of the prior weekly highs in the 1.3580s and the big figure, cable bulls will now eye a test of resistance in the 1.3650 area as attention turns to the BoE’s post-meeting press conference, which kicks off at 1415GMT.