The Bank of England (BoE) is due to meet this week. Economists at Commerzbank analyze how the Interest Rate Decision could impact Sterling.
Unchanged interest rates would be neutral for Sterling
As far as the BoE is concerned, the dampening effects on the economy of past rate hikes means that it is questionable whether it will further hike its key rate on Thursday even though inflation remains stubbornly high and wage growth also continues to rise again quite considerably.
The majority of market participants expects unchanged interest rates so that a decision of that nature would be neutral for Sterling initially. If, however, it becomes clear over the coming weeks that there are still price risks and if the impression that the BoE is not doing enough intensifies, the market would put punish Sterling.
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