Absolutely nothing

The BOE are still very much on the same path that they were at the last MPC meetings and the last inflation report.

They still want to reduce slack & see higher productivity, see better wage growth and the effects of transitory inflation moving through the economy

Carney mentioned the pound, and bemoaned the strengthening from the April low. That's a 1000+ pip bounce. Wow. What damage must that be doing? Maybe someone should show him a chart of how sterling fell around 2600 pips from the 2014 highs, or how it's currently nearly 6000 pips lower than it was in 2007. That's a move that affects the fundamentals, not mincing around in a 1500 pip range

The reason we got the moves today was purely based on expectation. The recent comments from MPC members at various functions painted a hawkish picture going into this meeting. That expectation was burst today. Nothing else has changed.

  • No one at the MPC has popped up and said rates won't be going up
  • No one has said that the timeline has changed, and Carney even kept the "timing of rate increases are drawing closer" language in the presser today
  • We've even got one member voting for hikes
  • The forecasts are broadly inline with previous ones on when the BOE expect the economy to meet the conditions for a hike
  • Even the dovish comments I highlighted in the statement don't materially change anything

The main expectations for the BOE to raise rates are still very much intact. The only thing that's been washed from the market today is the last few weeks of BOE headlines, and what we interpreted them to mean at the time. As traders that is all we can do. Carney made his comments in Lincoln last month, moved the market, and buffed them off today. That's trading for you

So the big question now is, has trade and bias for the pound changed? The answer is a big fat "no".

For me, I don't care when rates come. I don't care who thinks what about the real economy, or any potential damage rate hikes may do. All that is down the road stuff and not on my radar. All I care about is whether my long term strategy of buying the pound in anticipation of BOE rate hikes has changed. Based on today it hasn't and so all that the market has done is give me a dip to buy into

On that strategy, the only thing I listen to is the BOE and the price action, the rest is all noise

Where do we go from here?

There's a good case to say we go right back up from whence we came. There's an equally good case to say that the pound may now suffer a hangover from today that will mean it gets pushed around more by the dollar. Remember how resilient it has looked recently in the face of good US data? That premium may have been washed out now so we could see the pound reacting more to good US data over the next few days or weeks. This is still just short term stuff that we'll trade everyday. Until the big levels above or below go we're still very much range bound

Today's news will be tomorrows chip paper and the UK and BOE will carry on doing what they're doing

When he opens his eye the pound bulls will still be here