Yesterday, the pound surged after the BoE noted that rates may need to be raised earlier than what was anticipated in November. Equity markets took another dive as rising bond yields, combined with fears of higher inflation leading to higher borrowing costs, may have tempted investors to abandon equities and start to move into the more alluring bond market.
Pound Surges on BoE’s Hawkish Narrative
The pound traded higher against all but three of the other G10 currencies on BoE’s first “Super Thursday” for the year. The British currency gained the most against AUD, SEK and CAD in that order, while it ended the day on the back foot against the safe havens JPY and CHF, which gained as risk aversion returned. Sterling traded virtually unchanged against NZD.
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