Economists at TD Securities discuss the Bank of England Interest Rate Decision and its implications for the GBP/USD pair.

Hawkish (35%): 50 bps and unchanged guidance

The MPC decisively votes (8-1) to hike rates by 50 bps, and leaves key forward guidance unchanged, implying that policy will continue to be decided on a meeting-by-meeting basis. Despite weak inflation projections, there's no sign the MPC is done hiking. GBP/USD 0.20%.

Base Case (55%): 25 bps hike & unchanged guidance

The MPC hikes 25 bps, with guidance left largely unchanged. Little emphasis is put on the projections, which show much weaker inflation at Years 2 and 3. The bottom-line message is that hikes will continue so long as the data justifies them. GBP/SD -0.50%.

Dovish (10%): 50 bps hike but signals terminal

The hike is bigger, at 50 bps, but the language around the decision implies that this was a rush to terminal, and forward guidance is changed such that it raises the bar for future hikes. The MPC pushes back on market pricing of terminal rates, and emphasises the low level of inflation in Year 2 and Year 3 of its forecast. GBP/USD -0.80%.