As expected, the Bank of England raised interest rates this afternoon by 0.25%. This puts the benchmark rate at 0.5%. Of interest was the fact that four members actually voted for a 0.5% increase, showing the hawkish sentiment that is in the central bank at the moment.

In terms of market reaction, we saw the FTSE 100 slipped 35 points down to 7,550, but is holding ground and trying to rally back. GBP initially shot higher, with GBPEUR making fresh two year highs above 1.2050. UK yields also increase, with the 10yr bond yield hitting 1.35%.

From here, we think that investors will price in more aggressive hikes sooner from the bank this spring. This is likely going to push negative pressure on equities, but leads us to be bullish on GBP as a currency.

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