GBP-
If you were one of the cherished who read my FX street article GBP/EUR rich heading into BoE, you would have known to be careful holding onto GBP trades ahead of the BoE yesterday. For GBPEUR to be hitting a 6 month high in a pretty arid news environment was strange enough, but it was built entirely on the assumption of a strongly hawkish BoE.
Anything less than this would have ruined GBP's recent strength, although I admit, even I didn't expect just how badly this bet would go. MPC members voted 5-4 to hold rates steady, much tighter than the 7-2 expected, only for Bailey to then come out and suggest cuts coming much quicker than expected.
This has all precipitated a near 1% decline in GBPEUR and a similar drop in GBPUSD, with GBP only just improving as the double shock of the PM being buffeted by the Mandelson revelations and the BoE starts to cool.
Markets Today
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