April BoE rate cut likely as Sterling takes 'battering' from Mandelson crisis and BoE dovishness
|Sterling has taken a bit of a battering in the last 48 hours amid political woes and a dovish Bank of England.
While the razor-thin 5-4 vote in favour of no change at yesterday’s MPC meeting is closer than markets had been expecting, we were far from completely surprised given just how entrenched the hawks and the doves have been in their respective views of late. It was Bailey’s dovish remarks, however, that caught us off guard.
Not only did he signal increased confidence on achieving the inflation mandate, but he also seemingly paved the way for sooner and more aggressive cuts to the base rate this year. It's now merely a matter of timing as to when the MPC will deliver further easing.
While we think that the March meeting is a ‘live’ one, we favour April, as officials should have greater clarity on the progress towards the inflation mandate by then, and a press conference to explain their decision in greater detail. Either way, the prospect of a dovish Bank of England and growing pressure on the prime minister support our recent bearish pivot on the Pound.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.