The Pound Sterling (GBP) sold off on news that the two BoE hawks have now opted for unchanged rates.
The Pound Sterling sold off on news that the two BoE hawks have now opted for unchanged rates. Economists at ING analyze GBP outlook. A modest dovish shift by the BoE The Bank of England opted for a more dovish than expected communication. Despite keeping its guidance unchanged , the two most hawkish members changed their vote from a hike to a hold, and there was a mention in the minutes that rates can still be restrictive even with rate cuts.
All this isn’t hugely surprising, after all the real policy rate has continued to inch higher with inflation declining. Still, markets are largely reading this as an acknowledgement that cuts aren’t too far away, and are now increasingly convinced the BoE will start easing in June , along with starting to speculate on a May move . EUR/GBP may struggle to find much more support above 0.8600 as UK data still has to validate the recent repricing of the Sonia curve.
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