• The Bank of England has raised rates by 25 bps to 4.50% as expected.
• A massive upgrade to GDP forecasts and hawkish commentary on inflation has boosted the Pound.
• Bailey's past gloominess and worries about a global slowdown are holding Sterling down.

No recession – that has been the main message from the Bank of England (BOE) in its "Super Thursday" event. That has boosted the Pound, but doubts persist and for good reasons.

The BoE raised interest rates by 25 bps to 4.50% as expected, and the Monetary Policy Committee voted by the same 7:2 for this resolution. The big surprise came from the largest change to Gross Domestic Product (GDP) forecasts in the institution's history. The "Old Lady" moved from forecasting a two-year-long recession to no downturn at all.

In addition, officials in London also stated that inflation risks remain significantly skewed to the upside. Higher growth and elevated inflation worries justify higher rates – not so fast.

This has been the tenth consecutive rate hike, and the impact is still filtering through. A BOE member said that further raising rates is like raising the temperature in the shower before the hot water comes through the pipes. The BOE may provide these warnings and still decide it has done enough – or is nearly there.

Another reason to doubt further aggressive moves comes from Bank of England Governor Andrew Bailey"s previous comments. He tends to see the glass half empty on growth rather than having an upbeat tone.

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It is also essential to note that the Federal Reserve (Fed) has all but announced the end of its tightening cycle, while China is on the verge of deflation. The current environment seems inconducive to further aggressive hikes.

What is next? The BOE may raise rates once or twice before pausing – and markets can smell that. Bailey will speak to the media in a press conference and then provide several additional media interviews. Unless he declares a crusade on inflation – crashing the economy if that is what it takes – the Pound is set to retreat.

As brokers always say, past performance does not guarantee future gains, but Bailey's gloominess is a good reason to expect a downbeat message rather than a cheerful one. For Sterling, that means sinking.