Market Updates – June 25

Matthew Jackman

Head of Operations

Bank of England’s Interest Rate Hike Effect on the Pound

In an effort to address persistent inflationary pressures, the Bank of England has implemented a significant measure by raising interest rates by half a percentage point to 5% this past Thursday. This decision places additional burden on households grappling with surging mortgage expenses.

The latest rate hike marks the 13th consecutive increase by the Bank’s monetary policy committee (MPC) and sets the interest rates at their highest level since 2008. Prior to the announcement, financial markets were evenly divided, uncertain whether the Bank would opt for a half-point increase or a more modest quarter-point adjustment.

The Bank’s Monetary Policy Committee, acting independently of the government, reached a decision today through a 7-2 vote. On August 3, the committee will convene once again to determine whether to raise, lower, or maintain the current interest rate.

During the Times CEO summit, Prime Minister Rishi Sunak attributed the rising interest rates to elevated levels of inflation. Furthermore, the government is resolute in its commitment to curbing inflation and will steadfastly pursue its course of action.

During the European session on Friday, Cable maintained a weak stance and dropped to its lowest level in a week. Although the pair exhibited choppy trading after the rate decision, it struggled to surpass significant resistance levels such as the 200-week moving average and the monthly cloud base, thus maintaining a bearish pressure.

The downside movement was limited to some extent by slightly better-than-expected UK retail sales in May. However, the sentiment was once again dampened by disappointing UK PMI data for June, which fell short of expectations.

On the daily chart, the technical indicators indicate weakness, although the overall sentiment remains bullish. There is mounting pressure stemming from concerns that the UK economy could potentially slide into a recession following the Bank of England’s substantial interest rate hike on Thursday, which in turn may exert downward pressure on the value of the pound.

High Impact News This Week: June 26 – 30

Please remember to close the exposure in the directly associated pair to the news event. The exposure must be cleared 1 hour before the event and the position can be opened again from 30 min after the data has been released, in case of a speech positions can be reopened after the speech is over. 


13:30 PM BST   USD   Gross Domestic Product


07:00 AM BST   GBP   Gross Domestic Product

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