Pound could suffer further over the short term if market’s conviction on a June rate cut grows – MUFG
|The BoE vote that revealed the two voters for a hike previously abandoning that stance has fuelled renewed GBP selling. Economists at MUFG Bank analyze Pound’s outlook.
BoE shifts a little more toward a first rate cut
BoE left policy rate on hold for fifth consecutive meeting at 5.25%.
The overall message from the statement suggests as before – that returning inflation to target is proceeding but the point of being in a position to ease the monetary stance has not arrived.
The vote did highlight progress with an 8-1 vote as both Jonathan Haskel and Catherine Mann dropped their votes to hike. That alone justifies some increased probability of an earlier than we expect rate cut in June although whether the BoE ultimately moves in June or August remains a close call. We maintain our view of 100 bps of cuts this year.
The Pound could suffer further over the short term if the market's conviction on a June rate cut grows further and with that the potential extent of rate cuts in total delivered this year.
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.