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BoE: June hike seen as one and done – ING

ING’s James Smith notes that the Bank of England (BoE) kept rates at 3.75% in April but is moving closer to tightening as the Middle East crisis persists. ING now expects a single June rate hike, with UK inflation seen peaking slightly above 4% this year. ING remains sceptical about a persistent inflation surge.

ING shifts to a June hike call

“One month ago, Bank of England Governor Andrew Bailey told us markets were getting ahead of themselves on rate hike pricing. That feels like the underlying message from the April decision, which keeps interest rates at 3.75%. But it’s also clear the Bank is inching closer to a rate hike in June.”

“Governor Bailey characterised the decision not to cut, which is what the Bank was likely to have done pre-war, as in effect a decision to tighten policy.”

“That’s why, after today’s decision, we’re now edging towards a hike in June. It’s certainly not guaranteed, but that’s now narrowly our base case, having previously felt rates would stay on hold through this year.”

“Whether that’s followed by one or even two extra hikes, as markets are currently pricing, we’re less convinced right now. It’s clear the majority of the committee are still sceptical about this turning into a persistent bout of inflation, akin to what we saw in 2022. We strongly agree.”

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Lagarde speaks on policy outlook after leaving key rates unchanged

Christine Lagarde, President of the European Central Bank (ECB), explains the ECB’s decision to leave key rates unchanged at the April policy meeting and responds to questions from the press.

ECB press conference key quotes

“Economy was showing momentum before current turbulence.”

“Domestic demand remains main driver of growth.”

“Outlook highly uncertain.”

“Incoming info suggests that conflict is weighing on activity.”

“Business less confident about future.”

“Supply chains coming under pressure.”

“High energy to weigh on incomes.”

“High energy costs to make firms, households reluctant to invest.”

“Labour demand has cooled further.”

“Households in solid financial position.”

“Favourable starting point provides some cushioning.”

“Fiscal responses should be temporary, targeted, tailored.”

“Indicators of underlying inflation have changed little in recent months.”

“Wage tracker indicates easing labour costs.”

“Surveys indicate rise in other costs.”

“Most measures of longer term inflation expectations stand around 2%.”

“Increase in energy prices will keep inflation well above 2% in near term.”

“Will closely monitor size and impact of energy price surge.”

“Risks to growth are tilted to the downside.”

“Worsening of global market sentiment could further dampen demand.”

“Risks to inflation are tilted to the upside.”

“Not going to say whether we’re closer to any particular scenario.”

“We are certainly moving away from baseline.”

“To where exactly? I’m not sure is the most relevant assessment.”

“Most critical is what impact energy prices will have.”

“Made an informed decision of yet insufficient info.”

“Debated at length various options.”

“Decision was unanimous.”

“Debated at length a hike.”

“Some governors may argue both sides of proposals.”

“Hard data is broadly in line with projections.”

“There is such uncertainty, we need to revisit all issues at next meeting.”

“Given position we’re at, six weeks will be the right time to assess developments.

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BoE’s Bailey speaks on interest rate outlook, takes media questions

Bank of England (BoE) Governor Andrew Bailey is addressing a press conference and responding to media questions, explaining the reasons behind the central bank’s decision to hold the benchmark policy rate at 3.75% in an 8-1 vote split following the April monetary policy meeting.

Key takeaways from Bailey’s Press Conference

Monetary policy cannot prevent higher global energy prices from affecting uk economy and inflation.

Where we go from here will depend on size and duration of shock to energy prices.

We now project inflation will rise to a little over 3.5% by end of year.

Initial indirect effects of inflation are likely to be largest for food prices.

The longer the conflict in Middle East lasts, the worse the impact will become.

Size of second round effects is uncertain and will take time to build.

Monetary policy faces a difficult judgement call as cannot wait for conclusive evidence on 2nd round effects.

Under scenarios A and B, necessary interest rate response is largely achieved by not cutting rates as was expected in Feb and without further rate increase.

Prolonged spike in energy prices could lead to higher Bank Rate.

There is a good deal of space available to accommodate inflation pressures by not cutting rates as had been previously expected.

Sheer volatility of energy prices makes it impossible to put probabilities on different scenarios.

It would be a mistake to wait for second round effects before acting, that would be too late.

It will take time before we get a good read on pay as most annual settlements have already been agreed.

I think energy price profile of scenario B is more plausible than scenario A.

We do not hear that rapid return to pre-conflict energy supply conditions is likely

It is an active hold today, not a passive one.

Developing story, please refresh the page for updates.

This section below was published at 11:00 GMT to cover the Bank of England’s policy announcements and the initial market reaction.

The Bank of England (BoE) announced on Thursday that it left the benchmark policy rate unchanged at 3.75%, as widely expected, following the conclusion of the April monetary policy meeting.

The vote showed the expected split on the Monetary Policy Committee (MPC), with one member favoring a 25-basis point (bps) rate hike.

Takeaways from BoE Monetary Policy Summary

BoE Chief Economist Huw Pill voted to increase rates by 0.25 percentage points

Bailey says “reasonable” to hold rates at 3.75% given uk economic situation and uncertainty in Middle East.

CPI likely to be higher this year as effect of higher energy prices passes through.

Bailey says our job is to make sure that inflation gets back to 2% after initial impact of war on energy prices has passed.

BoE says there is a risk of material second-round effects from inflation on wage- and price-setting, policy would need to lean against this.

BoE says weaker economy and labour market and tighter financial conditions will help reduce inflation over time.

BoE Monetary Policy Report highlights

BoE has not updated central economic forecasts, gives new forecasts based on three scenarios for energy prices and inflation persistence.

BoE forecasts 2026 CPI averaging 3.3%-4.5% under different scenarios (Feb central projection: 2.2%).

BoE forecasts 2027 CPI averaging 2.6%-4.8% under different scenarios (Feb central projection: 1.9%).

BoE forecasts 2028 CPI averaging 1.5%-2.9% under different scenarios (Feb central projection: 2.0%).

BoE forecasts for 2027 GDP growth 0.8%-1.0% under different scenarios (Feb central projection 1.5%).

BoE forecasts for 2026 GDP growth 0.7%-0.8% under different scenarios (Feb central projection 0.9%).

BoE says most inflationary scenario “was likely to warrant a forceful tightening of monetary policy”.

BoE projections show inflation peaking at 6.2% in Q1 2027 under most inflationary scenario if rates only rise as markets expect.

Market reaction to BoE policy announcements

The Pound Sterling shows little reaction to the BoE policy announcements, with GBP/USD up 0.34% on the day at 1.3515, as of writing.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.24%-0.31%-1.90%-0.22%-0.52%-0.59%-0.69%
EUR0.24%-0.03%-1.68%0.02%-0.27%-0.32%-0.42%
GBP0.31%0.03%-1.66%0.06%-0.22%-0.27%-0.39%
JPY1.90%1.68%1.66%1.70%1.41%1.29%1.20%
CAD0.22%-0.02%-0.06%-1.70%-0.31%-0.39%-0.48%
AUD0.52%0.27%0.22%-1.41%0.31%-0.05%-0.15%
NZD0.59%0.32%0.27%-1.29%0.39%0.05%-0.10%
CHF0.69%0.42%0.39%-1.20%0.48%0.15%0.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

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USD/CAD edges lower as Oil retreat, Fed-BoC policy split keep volatility elevated

  • USD/CAD trades slightly lower at around 1.3655 after a flat day previously.
  • Declining Oil prices weigh on the Canadian Dollar, although structural support remains.
  • Diverging policy outlooks between the Fed and the BoC keep volatility elevated.

USD/CAD trades around 1.3655 on Thursday, down 0.21% on the day, after stabilizing in the previous day. The pair faces short-term pressure due to a modest pullback in the US Dollar, although downside momentum may remain limited in an uncertain macro environment.

The Canadian Dollar (CAD) shows resilience despite the recent decline in Oil prices, a key driver for the commodity-linked currency. West Texas Intermediate (WTI) is falling after several days of gains, trading around $103 per barrel, which typically weighs on the Loonie given Canada’s position as the largest Crude exporter to the United States (US). However, ongoing geopolitical tensions in the Middle East and potential supply disruptions continue to support the broader outlook for Canada’s energy sector.

On the monetary policy front, the Bank of Canada (BoC) kept its policy rate unchanged at 2.25% and adopted a wait-and-see stance while keeping options open. Governor Tiff Macklem emphasizes a data-dependent approach, noting that no preset path is in place. Inflation is projected slightly higher for 2026 and wage pressures remain persistent, limiting the scope for near-term easing. The central bank also signaled that trade shocks from the United States could justify rate cuts, while sustained energy-driven inflation could require tightening.

On the US side, the US Dollar (USD) corrects lower after two days of gains. The Federal Reserve (Fed) held rates within the 3.5%-3.75% range, with a divided vote reflecting rare internal disagreement. Chair Jerome Powell reiterated that inflation remains elevated, partly due to higher energy prices, reinforcing a broadly hawkish stance.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.26%-0.32%-2.00%-0.21%-0.52%-0.54%-0.67%
EUR0.26%-0.03%-1.69%0.05%-0.25%-0.25%-0.38%
GBP0.32%0.03%-1.62%0.09%-0.20%-0.21%-0.36%
JPY2.00%1.69%1.62%1.70%1.40%1.33%1.22%
CAD0.21%-0.05%-0.09%-1.70%-0.32%-0.35%-0.46%
AUD0.52%0.25%0.20%-1.40%0.32%-0.01%-0.13%
NZD0.54%0.25%0.21%-1.33%0.35%0.00%-0.13%
CHF0.67%0.38%0.36%-1.22%0.46%0.13%0.13%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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GBP faces pressure after BoE leaves interest rates unchanged at 3.75%, as expected

  • The Pound Sterling comes under pressure against its peers after the BoE’s interest rate decision.
  • The BoE maintains the status quo, leaving interest rates unchanged at 3.75%.
  • On Wednesday, the Fed held interest rates steady in the range of 3.50%-3.75%.

The Pound Sterling (GBP) faces selling pressure, prima facie, after the Bank of England’s (BoE) monetary policy announcement. As expected, the BoE has left interest rates unchanged at 3.75%, with an 8-1 majority. This is the third straight meeting that the BoE has maintained the status quo.

BoE Chief Economist Huw Pill was the one Monetary Policy Committee (MPC) member who dissented from the hold decision and voted for an interest rate hike. Pill was expected to advocate an interest rate hike, as he stated in an event in the middle of the month, that interest rates should be raised for inflation to return to the central bank’s 2% target.

The BoE needs to make decisions that give “the most insurance” against a repeat of the 2022 inflation shock, Pill argued, warning against a “wait and see approach,” Bloomberg reported.

Meanwhile, the US Dollar (USD) faces intense selling despite growing concerns over the Strait of Hormuz outlook and a hawkish Federal Reserve (Fed) hold.

United States (US) President Donald Trump stated on late Wednesday that Washington’s naval blockade of Iranian sea ports will continue until Iran gives up its nuclear ambitions.

On Wednesday, the Fed left interest rates unchanged at 3.50%-3.75%, however, three members of the rate-setting committee dissented the decision and advocated for a move away from the monetary easing bias.

Going forward, investors will focus on the US preliminary Gross Domestic Product (GDP) data, which will be published at 12:30 GMT. On an annualized basis, the US GDP growth is expected to have remained higher at 2.3% against the previous reading of 0.5%.

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EUR/JPY drops to near 186.00 amid fresh intervention warnings from Japan

  • EUR/JPY retreats to 186.20 from two-week highs above 187.50, turns negative on the day.
  • Japanese Finance Minister Katayama said that “the time for decisive action” is near.
  • German GDP beat expectations in Q1, but unemployment rose unexpectedly.

The Euro (EUR) has pulled back form two week highs above 187.50 against the Japanese Yen (JPY) on Thursday, retreating to 186.20 at the time of writing, as Japanese Finance Minister Satsuki Katayama launched a clear intervention warning.

Katayama affirmed on Thursday that the “timing for decisive action is near” and that Japanese authorities are getting closer to stepping into the FX markets. These comments arrive after the USD/JPY crossed the key 160.00 level, considered a line in the sand for Tokyo.

The JPY was showing the weakest performance among the G8 currencies on Thursday. The latest jump in Oil prices and the prospect of an extended blockade in the Strait of Hormuz have reactivated concerns about the consequences for the Crude-importing Japanese economy, offsetting the hawkish tone of the Bank of Japan’s (BoJ) recent monetary policy meeting.

In Europe, German jobless figures in March disappointed. The unemployment rate rose to 6.4%, against the market consensus of a steady 6.3% rate from February. Data from Destatis revealed that the number of jobless workers increased by 20K, exceeding the 4K forecasted by market analysts and keeping the total unemployment figure beyond 3 million.

These figures offset the 0.3% increase of the first quarter’s Gross Domestic Product (GDP), which beat expectations of a slight slowdown to 0.2%, following another 0.3% quarterly gain in the last three months of last year.

In the Eurozone, inflation figures have confirmed the higher inflationary pressures stemming from the Middle East conflict. The Eurozone preliminary Harmonized Index of Consumer Prices (HICP) has risen 1% in April, following a 1.3% increase in March. Moreover, the HICP rose 3% YoY, from 2.6% in March, and exceeded market expectations of 2.9%.

The focus now shifts to the European Central Bank (ECB), which will disclose the outcome of its last monetary policy meeting. The bank is likely to keep its benchmark interest rate on hold, but hint at rate hikes in the near term, pressured by the rising prices.

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USD/INR surrenders some gains, remains close to record highs

  • The Indian Rupee recovers slightly from its record lows of around 95.35 against the US Dollar.
  • Oil prices hit a fresh over seven-week high as US President Trump vows to prolong the blockade on Iran.
  • More Fed members call for a shift from easing bias.

The Indian Rupee (INR) claws back some of its early losses against the US Dollar (USD) during afternoon market hours in India on Thursday after plummeting to record lows. The USD/INR pair corrects slightly to near 95.10 as the US Dollar turns upside down, but is still close to its all-time high 95.35. The pair rallied in the opening as oil prices gained sharply, following remarks from United States (US) President Donald Trump that Washington’s naval blockade on Iran will remain intact.

Trump warns prolong naval blockade on Iran

On late Wednesday, US President Trump announced that he has rejected the recent peace proposal from Iran to reopen the Strait of Hormuz, a vital passage for almost 20% of global energy supply, whose closure has prompted the supply crisis and has boosted oil prices, which could have delayed negotiations regarding Tehran’s nuclear ambitions.

US President Trump said that Washington will continue the naval blockade of Iran until he secures a deal with Tehran to address the country’s nuclear program.

At the press time, the WTI Oil price ticks lower to near $105.00 after facing slight profit booking near its fresh over seven-week high of $107.35 posted earlier in the day.

Currencies from economies, such as India that rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

Fed sees current policy stance as appropriate

The US Dollar gives back its early losses and slides lower; however, its outlook remains upbeat, following remarks from Fed Chair Jerome Powell that the “number of officials who would support a move away from an easing bias has increased”.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.18% lower to near 98.80.

On Wednesday, the Fed left interest rates steady in the range of 3.50%-3.75%, with an 8-4 majority. One member dissented in favor of a rate cut, while three dissented against the inclusion of an easing bias, according to the monetary policy statement.

In the press conference, Fed Chair Powell warned that the central bank is vigilant to “risks on both sides of our mandate”, adding, “Developments in the Middle East are contributing to uncertainty.”

FIIs continue to dump their stake in Indian stock market

Foreign Institutional Investors (FIIs) remain net sellers in the Indian stock market amid surging oil prices, which have raised concerns about India Inc.’s earnings projections. Overseas investors have remained net sellers in all previous eight trading days, and have offloaded their stake worth Rs. 22,863.50

Technical Analysis: USD/INR sees more upside towards 96.00

USD/INR posts a fresh all-time high near 95.35 during the day on Thursday. The pair holds a firm bullish bias as spot remains well above the 20-period Exponential Moving Average (EMA) at 93.83, keeping the short-term uptrend intact.

The Relative Strength Index (RSI) hovers near 65.77, indicating strong but not yet extreme upside momentum, which suggests buyers still retain control, though the risk of overextension is building.

On the downside, initial support is aligned with the 20-EMA around 93.81, where a deeper pullback would be expected to attract dip buyers and maintain the broader advance while it holds. A daily close below this dynamic floor would hint at fading upside pressure and open the door to a more extended correction toward prior price congestion levels not yet tested in the current leg. Looking up, the price has entered uncharted territory and will likely extend its rally towards 96.00.

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EUR/USD nears 1.1700 despite high Eurozone inflation and low growth data

  • EUR/USD returns to levels near 1.1700 following Eurozone GDP and inflation figures.
  • The HICP accelerated to 3% in the 12 months to April.
  • The focus now shifts to the ECB’s monetary policy decision.

The Euro (EUR) is picking up against US Dollar (USD) on Thursday, returning to levels right below 1.1700 at the time of writing, despite Eurozone macroeconomic data, which has confirmed the picture of a sluggish economy and soaring inflationary pressures.

Eurozone’s Preliminary Harmonized Index of Consumer Prices (HICP) figures have shown that inflation surged to a 3% year on-on-year rate, its highest level since September 2023, from 2.6% in March and above the 2.9% anticiparted by the market consensus. Excluding food and energy prices, the Core HICP eased to a 2.2% y-o-y rate from 2.3% in March.

At the same time, Gross Domestic Product (GDP) figures released by Eurostat revealed that economic growth slowed down to a 0.1% growth in Q1, from 0.2% in the last quarter of 2025, against expectations of a steady 0.2% growth.

These figures pose a significant challenge for the European Central Bank (ECB), which is expected to disclose its monetary policy decision later on Thursday. The bank is widely expected to leave its benchmark rate unchanged, but it will have to fine-tune its monetary policy to fight inflation without crushing an ailing growth.

The Fed moves away from monetary easing

On Wednesday, the Fed left rates on hold at the 3.50%-3.75% band, as expected, yet with the most divided committee since 1992, as three policymakers argued that the “easing bias” phrase is no longer appropriate given the spike in energy prices.

The market has priced out the chance of a Fed rate cut this year, according to the CME FedWatch Tool, and now prices in a nearly 50% chance of a rate hike in June next year. This has given US Treasury yields a fresh boost, providing additional support for the US Dollar.

Beyond that, Fed Chairman Jerome Powell, who ends his term on May 15, affirmed that he will remain at the bank as Governor, due to the legal actions taken against him by US President Donald Trump. Powell will replace Stephen Miran, who was appointed by Trump in 2025 and voted for a rate cut on Wednesday, and is likely to counter pressure from the administration on the next Chair, Kevin Warsh, to ease monetary policy.

Technical Analysis: Euro hoversa above a key support zone

EUR/USD Chart Analysis

EUR/USD remains under pressure with price action supported above a cluster of supports, above 1.1645, which held bears several times in mid-April and whose upper limit is the neckline of a bearish “Head & Shoulders” (H&S) pattern at 1.1675.

Technical indicators on the 4-hour show a neutral-to-bearish trend. The Relative Strength Index (RSI) remains below the 50 level, highlighting moderate downside pressure, and the Moving Average Convergence Divergence (MACD) remains below zero.

Bears need to breach the mentioned neckline at 1.1675 and the April 8 intraday low, in the area of 1.1645, to confirm the H&S formation. The pair might find some support at the 1.1630 area, where the 50% Fibonacci support of the March-April rally meets late March and early April highs. The 61.8% Fibonacci retracement is at 1.1583. The H&S’s measured target is coincident with the April 6 low near 1.1500.

On the topside, immediate resistance is at Wednesday’s high at 1.1720 ahead of the mentioned weekly high at 1.1755.