BoE hesitations to fight inflation risks would be disastrous for Sterling – Commerzbank

The Pound rose after the publication of inflation data on Wednesday. Economists at Commerzbank analyze GBP outlook.

The BoE will have to deliver

Inflation remained above expectations. Moreover, the core rate remained unchanged at 6.9%. That increases the likelihood that the BoE will hike key rates another two times until year-end. It might have to take further action in 2024 as well. 

The market is confident that the BoE will take action, but it will have to deliver. 

If, over the coming weeks, the market gets the impression that the BoE might hesitate after all to fight inflation risks in order not to dampen the economy too much, that would be disastrous for Sterling.