Economists at TD Securities discuss the Bank of England interest rate decision and its implications for the GBP/USD pair.

Hawkish (15%): No Change to Guidance

“The expected doves dissent, while Mann votes for 75 bps. Forward guidance remains unchanged and the MPC drops the reference to market pricing being too high. GBP/USD +0.25%.”

Base Case (60%): Slight Tweaks to Guidance

“Language softens on the margin to reflect the downshift to a 50 bps hike, but nothing in the Summary suggests the next meeting will see a further slowdown in the pace of hikes, with 50 bps still on the table for February. A tight labour market is still the focus, despite soft growth numbers. The MPC retains the clause about market pricing being too aggressive. GBP/USD -0.15%.”

Dovish (25%): More Dovish Dissents

“More than two MPC members vote for 0 or 25bps hikes, signalling that the MPC is ready to downshift its pace of hikes further. This would suggest a terminal rate of at most 4%, with hikes ending by March. GBP/USD -1.00%.”