GBP/USD: Surprise 50 bps BoE hike to open the door for a decisive rally

GBP/USD has extended rebound toward 1.32. Can a 25 bps Bank of England (BoE) hike lift the pound? A dovish hike could cause the British pound to weaken against its rivals, FXStreet’s Eren Sengezer reports.

Holding policy rate unchanged at 0.5% would be a nightmare scenario for the GBP 

“In case the BoE's policy statement suggests that the bank will take a cautious stance with regards to rate hikes moving forward, the pound could come under renewed bearish pressure.”

“If the BoE holds the policy rate unchanged at 0.5%, that would be a nightmare scenario for the GBP and trigger a sharp decline in GBP/USD.”

“A surprise 50 bps hike in March should open the door for a decisive rally in GBP/USD. The bank could also adopt a hawkish tone by opening the door for one more rate hike in the upcoming meeting even if it goes for a 25 bps hike this time around.”

See – BoE​​​​​​​ Preview: Forecasts from 10 major banks, eyeing a hat-trick caught between a rock and a hard place