There is room for the market to moderate hawkish expectations for the UK and bring GBP downside – TDS
The Bank of England kept the Bank Rate on hold today at 5.25%. The BoE came in a tad hawkish and supported the GBP. Economists at TD Securities analyze Sterling’s outlook.
The MPC voted 6-3 to maintain Bank Rate at 5.25%
The GBP got a boost vs the USD as the vote split of 6-3 came in on the hawkish side along with upward revisions to the near-term inflation profile.
We like GBP lower vs. peers like AUD and NZD where the growth inflation outcomes don't look as meek and where some catch-up is forthcoming.
Looking at market expectations of cuts over next year, it seems like there is still more optimism on the UK economy vs. the Euro area, whereas we expect the BoE to lead the global cutting cycle amongst peers. Accordingly, we see some EUR/GBP upside as markets keep moderating hawkish expectations for the UK.
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FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
