After the Fed's steep rate hike, the Bank of England's rate decision will be the focus

As a result of the ECB's statement about accelerating work on a crisis tool that will be used to address concerns about fragmentation of EU bond markets and Italian bond market developments, European markets managed to break the losing streak, closing the day higher.

Asia's stocks turned lower following the US Federal Reserve's decision to hike rates by 75 basis points. Fed raised the target funds rate between 1.5% and 1.75%. In addition, the Fed sees a steady rise in its federal funds rate this year, with a target of 3.4% by the end of the year.

European stock futures pointed to a higher open on Thursday as Investors will digest the Federal Reserve's latest steep interest rate hike before Thursday's Bank of England monetary policy meeting. 

BoE rate decision

As part of its attempt, like central banks around the world, to curb soaring inflation, the Bank of England is expected to raise interest rates by 25 basis points to 1.25% at its policy-setting meeting today later.

It is also possible that the Bank of England will follow the Fed's lead and announce a more aggressive rate hike with inflation at 9% in the 12 months to April, the highest rate in 40 years. 

A unanimous vote on a 0.25% rate increase could be viewed as dovish and harm the British pound's standing against its rivals. However, the immediate reaction to the press release revealing that three or four policymakers voted for a 50 bps hike will likely lead to further gains for GBP/USD. The surprise increase in interest rates should also boost the sterling.

Oil market

Oil prices recovered on Thursday from a steep drop in the previous session, supported by tight oil supply and peak summer consumption.

Due to Libya's political impasse, the closure of production and export facilities has resulted in a collapse in oil production, falling to 100,000-150,000 barrels per day from 1.2 million barrels per day last year.

However, a rebound in China's demand sentiment, coupled with an expected seasonal ramp-up in OECD oil demand, could lead to a price increase through the third quarter of 2022.

Events of today

Besides the Bank of England meeting later Thursday, economic data releases in Europe include new EU car registrations for May as well as Italian inflation data for May. 

Philadelphia Fed manufacturing index, US housing starts and initial jobless claims are due later in the US session.