The pound has risen broadly following the Bank of England’s indication of a “hawkish” stance, but in essence, it is maintaining the status quo established in November. The threshold for appearing hawkish is currently quite low, particularly after the extremely dovish stance taken by the Fed yesterday.

The key takeaway from the Bank of England is the absence of any significant policy shift. That’s essentially the main point. It seems unlikely that this would provide a sustainable reason for the pound to appreciate against other major currencies, with the exception of the dollar. This is especially true given the notable signs of weakness in UK data observed this week, most notably in the labour market report.

Although EUR/GBP has dipped slightly from 0.8630 to 0.8605, the 100-day moving average at 0.8635 remains a crucial technical obstacle. The next event on the horizon is the ECB, which is expected to introduce additional volatility to the pair before the week concludes.