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BoE steps up pace of hikes in response to persistent inflation risks

• The conflict between Hamas & Israel has triggered an accelerated sell-off for ILS that has lifted USD/ILS back above the 4.0000-level.
• Recent history suggests ILS can weaken further during conflict.
• BoI intervention will help to dampen scale of ILS sell-off.
• ILS weakness could make BoI cautious over cutting rates as market expects.
• Levels above 4.0000 for USD/ILS have proven short-lived since the GFC. We expect ILS to rebound from weaker levels once conflict de-escalates.