We’ve seen the FTSE 100 move higher 0.33% today at 7,325 points as the Bank of England (BoE) increased interest rates to 0.75% from 0.5%. Even though hikes are traditionally bad for the stock market, the market gained as the central bank hinted that future hikes are likely to be limited.
Despite seeing inflation hitting 8% in the next quarter, the committee said that only modest further tightening is likely to be needed. This shocked the bond market, that was expecting several more rate hikes this year.
Given the rates have an impact on the currency market, we’ve also seen GBP pairs slump lower. GBPUSD dropped a cent from 1.32 to 1.31 on the announcement, with GBPEUR also struggling.
With a cheaper currency also helping FTSE 100 exporters, further gains for the stock market could be seen to end the week.