Home Forex BoE’s hesitant stance will remain a burden for the pound – Commerzbank

BoE’s hesitant stance will remain a burden for the pound – Commerzbank

by SuperiorInvest

The economic outlook for the UK remains fairly bleak, while inflation remains at high levels. It is on this background Bank of England is likely to act only tentatively, which should weigh on the pound, Commerzbank economists report.

An economic downturn is probably inevitable

“An economic downturn is probably inevitable. This is because inflation, which remains high, will continue to dampen consumer sentiment and the BoE’s interest rate hikes to date will increasingly be felt. In addition, fiscal policy has little room for expansionary measures due to the tight budget situation.”

“As long as the BoE remains dovish, monetary policy will continue to weigh on the pound.”

“Another aggravating factor is the consequences Brexit, which are increasingly evident in the economy. It also darkens economic outlook in the long run.”

“We expect the BoE to cut its key rate in 2024, so sterling’s weakness is likely to persist.”

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