FX Daily Wrap Up

The Bank of England was in rare form last night, taking the surprising step of increasing rates by 25 basis points to 5.25%. In the accompanying statement, the central statement quoted was "growth continues at a firm pace," and risks to inflation appear more to the upside. The effect on the majors included the GPD/USD shooting up to 1.9535 before falling back to the current 1.9450, and the EUR/GDP dropping to .6650 before trickling down to .6626 to close out the American sessions. The UK’s economy has shown remarkable resiliency over the past several months – with a strong showing in the consumer sector and a recent rebound in retail sales, the Bank felt inclined to raise rates in hopes of slowing down growth and preventing exports from being priced out of the global economy. A firm labor market and near double-digit increase in housing has provided almost no concern for a decline in the currency – the sole purpose of this rate hike is to slow the output to keep the Pound as competitive as possible. XPRESSTRADE Analyst David Hilgeman