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Talking Points:

- The BOE’s decision to keep rates on hold today marks the culmination of a tumultuous few weeks of trading for the British Pound[1]. - Three weeks ago, odds for a 25-bps rate hike in May were 85%; now, rates markets are barely pricing in one hike in 2018 at all. - See the full DailyFX Webinar Calendar[2] for upcoming strategy sessions. Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides[3]. The British Pound has been in meltdown mode for the past three weeks, following rate hike expectations every step of the way. On April 19, odds of a 25-bps hike at the May policy meeting were still at 85%, and GBP/USD[4] above 1.4300. But since then, GBP/USD has dropped closer to 1.3500, culminating in the BOE’s May decision to keep their main policy rate on hold at 0.50%. This has been a dramatic change in fortunes, no doubt. And despite BOE Governor Mark Carney’s suggestion that a rate hike will still happen at some point this year, traders seem to have embodied the mantra “once bitten, twice shy.” Rates markets are only pricing in 19-bps of tightening for the remainder of 2018, with the November policy meeting – one of the four per year that is accompanied by a new Quarterly Inflation Report (QIR) – being seen as the most likely period for when the hike would occur (64% implied probability). Table 1: BOE Rate Hike Expectations (May 10, 2018) Central Bank Weekly: British Pound Slides Alongside 2018 BOE Rate Hike Odds If the “once bitten, twice shy” mantra is indeed the motif for traders now, then

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The Logo Story

currensceneFLOGO WHTsquareThough not the oldest form of currency, some form of shell money appears to have been found on almost every continent. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry.

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