The BoE’s policy update triggered a slight initial sell-off in the pound. Economists at MUFG Bank analyze the GBP view.
GBP to weaken further
Updated policy reports from the Fed and BoE were similar in our view, signaling that no further hikes are more likely to be required, but not going so far as to rule it out entirely. The development supports our view of further weakening of the pound.
The UK rates market is currently cutting prices by around 55 basis points until the end of next year. We still expect the BoE to make more cuts next year than the current price.