In an odd twist of fate, the market is now playing catch up to the BOE.
The rates market is now bringing forward BOE rate hike bets, with the bank rate seen at 1% by May after the more hawkish turn by the central bank from the decision earlier here.
There vote to hike rates was 5-4 today but the minority camp actually wanted to hike rates by 50 bps to 0.75% instead. That sets the tone for what to expect going into the next meeting in March.
Anyway, the pound is jumping on the decision and the key chart to watch now is that of EUR/GBP.
The pair is starting to take a look at a break lower, threatening a return to levels last seen before the Brexit referendum. The 0.8300 handle is the big one to watch ahead of the weekly close, after having stalled any major downside move over the years.
The latest was back in December 2019 and February 2020, and that is where we are starting to venture towards now.
If we do see a more dovish ECB later today, that's a perfect recipe for sellers to chase a technical drop - which in turn will spell out quite the upside for the pound across the board as well.
