Time for GBPUSD to erase the BoE’s falls?

On February 2, the Bank of England made a 50bps hike as expected. However, the decision was ultimately seen as a dovish one as the Bank of England left open the possibility that it could be the last hike of the current cycle. Furthermore, the vote split was more dovish than the prior meeting too with hawkish dissenter Mann bringing her decision in line with the rest of the members.

At the time we noticed that seasonal speaking the GBPUSD tended to fall after a BoE rate hike and then pick up several days late. So, will we see the GBPUSD pick-up? Or will the USD story still dominate cable as a swathe of recent Fed speakers have repeated the need for the Fed to continue its fight against inflation which is a hawkish USD message and naturally against this seasonal outlook?

Major Trade Risks: The major trade risk here is that USD strength prevails and that US CPI data this Tuesday surprises to the upside and gives the USD another boost higher (weakening GBPUSD further).

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