The Bank of England will announce its rate decision at 15:00 MSK. The consensus is a 25 basis point hike, to 4.00% from the current 3.75%. There has been no such move since August 2023.
The Bank of England is the central bank of the United Kingdom. The rate is set by its Monetary Policy Committee, and the vote split is published alongside the decision. The vote split shows which Committee members were in favor of a hike, a hold, and a cut.
For the pound, this is a day of heightened volatility. GBP/USD has approached the meeting at a seven-week high of 1.3485.
What is released at 15:00?
Four releases arrive in a single minute:
- Rate decision. The headline number of the day.
- Committee vote split. Shows how unanimous the Committee is.
- Monetary Policy Summary. An account of the rationale behind the decision.
- Quarterly Monetary Policy Report. Updated forecasts from the regulator.
Half an hour later comes the voice. At 15:30, the press conference of Andrew Bailey, Governor of the Bank of England, begins.
What numbers are in the forecast?
- 4.00% - the expected rate after a 25 basis point hike.
- 7-0-2 - the expected votes: seven for a hike, zero for a hold, two for a cut.
- 3-0-6 - the reverse split at the previous meeting.
- 0.75 pp - the additional hike the market is pricing in for next year.
Where this leads. The British rate would then be higher than the expected US rate.
Why is the rate being raised?
Arguments in the Committee. Hetal Mehta, chief economist at St James's Place, believes two factors tipped the scales:
- Energy prices.
- Sustained economic growth.
The technical side. At Societe Generale, the pound's break above its 200-day moving average is explained by the unwinding of accumulated short positions.
Where does the pound stand?
- 1.3485 - the current GBP/USD level, overnight range 1.3408-1.3484.
- 2.7% - the gain since mid-October.
- 1.3535 - resistance.
- 1.3390 - support, which is also the 100-day moving average.
- 65.3 - the current RSI.
The dollar was weakening on its own as well. DXY fell below 101.50, to 101.35, after the Democrats won both chambers of Congress in Tuesday's elections. DXY is the dollar index against a basket of major currencies.
What does this mean for a trader?
- Scenario A: everything in line with the forecast. The rate and votes match, and the hike is already priced in. The move will come from the tone of the report and Bailey's answers after 15:30.
- Scenario B: a divergence. The rate or the vote split diverges from the forecast. Large option strikes sit near the price at 1.3450 (£570 mln) and 1.3365 (£630 mln), and moves toward such levels usually happen fast.
The key point: the market has already priced in the hike itself, so the outcome of the day is decided by the tone of the Monetary Policy Report and Bailey's answers.
Days like this need their own risk regime. It is convenient to compare drawdown and instrument conditions and pick a challenge for volatile sessions.
What's next?
- 15:30 MSK - Bailey's press conference.
- Friday - the US employment report, the next catalyst for dollar moves.
Dates at hand. Both events are in the economic calendar.
Will you be watching cable at 15:00?
Four releases in a single minute and a press conference half an hour later. The pound works through days like this in a couple of hours. What decides it is the size you're in it with: seventy pips of movement on an account of a couple thousand dollars is an amount you don't even put into the statistics. In prop trading, the working capital is provided by the company, and the trader first passes its selection based on discipline and loss limits. It's calmer to work through the mechanics before the next meeting, not at 15:01.