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Traders bank profit on the recent Pound run

BoE hikes rates and offers supportive UK guidance, however traders close £ profit positions..


As expected, the Pound rose in the wake of the BoE interest rate decision and again after MPC members provided forward guidance. The door to further rate hikes remains open and we still maintain a 5% target for the summer months. The Bank's immediate outlook on the UK was the only surprise from the meeting, suggesting things are working rather well.

This was reflected in their largest ever GDP upgrade in its history. +0.25% is expected this year now compared to -0.5% which was only provided 3-months ago. The BoE now fully expect the UK to escape a recession (something they strongly predicted wouldn't happen towards the end of 2022) thanks to lower energy prices, a resilient labour market and strong global growth.

Whist this is all positive news for the Pound, it seems yesterday traders closed their positions on where they think £ could go and banked profit from the recent, unexpected run. 0.5% was quickly lost after the minutes across the board, not helped by a global stock market selloff

Disney stocks fell by 6% yesterday after it reported a fall in subscriber growth and another mid-tier US Bank entered the banking system fallout. PacWest Bancorp reported a 10% drop in deposits last week and shares have dropped 25% since the news.

Today, UK GDP figures were announced with mixed results. Ongoing pubic sector strikes and wet weather caused the all-important services sector to record a 0.5% slump. The overall GDP figure for March was a contracting -0.3%, below the expected +0.1%. However, the economy nevertheless grew 0.1% in Q1, unexpectedly equaling the final quarter of 2022.

For now, the Pound continues to trade at favourable levels across the board but with a little more uncertainty for the weeks ahead..