BOE hikes policy rate by 50 bps to 2.25% as expected

Following its September policy meeting, the Bank of England (BoE) announced that it raised the policy rate by 50 basis points (bps) to 2.25%. Although this decision aligned with the market expectation, futures markets were pricing in a strong chance of a 75 bps hike.

The GBP/USD pair meets with a fresh supply and trims a part of its strong intraday gains after the Bank of England announced its policy decision. Spot prices retreat back below the 1.1300 mark, though they remain comfortably above the lowest level since 1985 touched earlier this Thursday.

As was widely expected, the UK central bank raised interest rates by 50 bps – the seventh hike since December – at the end of the September policy meeting. This, however, might have disappointed some investors anticipating a more aggressive rate increase and turned out to be a key factor acting as a headwind for the British pound.