GBP: No major impact from BoE hold – ING
|
The sterling curve saw a minor 5bp hawkish repricing after the Bank of England’s consensus hold yesterday, ING's FX analyst Francesco Pesole notes.
Data uncertainty remains elevated
"There were two noteworthy aspects of the meeting: firstly, Catherine Mann has rapidly abandoned the dovish camp, leaving only one member voting against a hold, and secondly, we saw some reference to the fact that should data show greater job market instability, the BoE can draw disinflation-related conclusions and cut rates faster."
"Our call is unchanged – three cuts this year – but data uncertainty remains elevated. The UK is about to face the combined impact of the announced hike in corporate taxes, US tariffs, and a likely spending squeeze to be announced next week. The balance of risks looks tilted to the downside for growth – and intuitively for front-end GBP rates – but inflation has remained too sticky so far, and the Sonia pricing has remained understandably cautious (two cuts by year-end)."
"We still look with some concern at next week’s budget events from a sterling perspective. Implications for growth and the bond market argue against short-term bullishness on the pound. We still prefer playing any GBP weakness through Cable rather than EUR/GBP."
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.