According to Jane Foley, Senior FX Strategist at Rabobank, BoE’s outlook for monetary policy is likely to take the upper hand as compared to the Brexit in guiding the outlook for the pound.

Key Quotes

“As its stands a 25 bps rate hike next month is already mostly priced in. The implication is that there may not be much additional upside potential for GBP on a rate hike next month unless the Bank steps up its hawkish rhetoric further.  After the expected move from 0.5% to 0.75% this spring, the market is not fully priced for a hike to 1.00% until May 2019.  This suggests that for GBP, the most interesting part of next month’s policy meeting may not be the rate decision but the guidance referring to the risk of another rate rise later in the year.”

“It is our view that there is a good chance that the BoE will follow a spring rate hike with an additional move in November. However, there are clear risks to this view. Winter weather has impacted recent economic activity and February UK CPI inflation data were softer than expected.  This suggests that the Bank may be less inclined to reinforce a hawkish outlook next month.”

“Brexit may also bring complications for the policy outlook.  It is hoped that an outline trade deal between the EU and UK will be on the table by October this year.  This, however, could prove optimistic.  It trade talks are not going well, the Bank may find it more difficult to inflict another rate hike on the economy.  For now we expect that GBP will continue to draw some support from the anticipation that the BoE will maintain a hawkish position in the coming month, though ultimately we would expect the pound’s biggest moves over the next 12 months to be related to Brexit.”

“As the summer months approach, we see scope for concern about the progress of Brexit trade talks to weigh on the pound and see risk for EUR/GBP to edge towards 0.89 on a 3 mth view. That said, it is our house view that the bones of a free trade deal will be in place by March 2019.  We expect that this should spark a push back to 0.84 on a 12 mth view.”

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.


GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.


XAU/USD consolidates daily gains above $1,800

After advancing to its highest level since September of 2011 at $1,818 on Wednesday, the XAU/USD pair staged a correction and briefly dropped below $1,800 on Thursday.

Gold News

Cryptocurrencies: War for dominance hit the bedrock of the market

Bitcoin tried to regain market share and activated sales in the Altcoin segment. BTC/USD, ETH/USD and XRP/USD are looking for supports and a rebound to push them to new elative highs. The current compression on the XRP/USD chart could trigger an exploding movement.

Read more

WTI once again breaks $40 per barrel after trading lower in early EU trade

There has been quite the bounce in WTI since the EU session after some strong selling pressure during Thursday and overnight. Once again on Friday's session, the price has taken the USD 40 per barrel handle. 

Oil News