The Bank of England had hiked Bank Rate to 0.5 percent from 0.25 percent in November, despite subdued growth, as it has become more worried about the combination of high inflation and low unemployment.
In all, the central bank kept its flexibility on additional rate hikes in 2018 and said it would ‘monitor closely’ incoming data.
“We still believe the rate hike was about taking back the emergency cut from August 2016 just after the Brexit referendum and not necessarily the beginning of a new hiking cycle”, said Danske Bank..
The Bank of England is very positive on wage growth and that it does not want to tighten monetary policy too much relative to the ECB. Therefore, the base case right now is no additional rate hikes in 2018, added Danske Bank.
At 20:00 GMT the FxWirePro's Hourly Strength Index of British Pound was bearish at -87.9069, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 83.0999. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
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