Additional GBP downside into year-end – CIBC
|The BoE left rates at 5.25% for a second straight meeting in October. Economists at CIBC Capital Markets analyze BoE’s policy outlook and expect the Pound to remain under pressure.
BoE to maintain policy at the current rate through August 2024
Irrespective of BoE macro forecast amendments, including higher CPI, and downgraded GDP, (the bank anticipates zero growth between Q2 2024 and Q1 2025), we continue to expect the BoE to maintain policy at the current rate, 5.25%, through to August 2024.
Elevated and sticky UK CPI points towards the BoE being a policy laggard in terms of monetary easing, underlining macro underperformance well into 2024.
The corollary of weak macro data and moderating rate expectations (we anticipate that Q1 terminal rate expectations should be pared, from the current 7 bps), is the prospect of additional GBP downside into year-end.
GBP/USD – Q4 2023: 1.18 | Q1 2024: 1.18
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