Sterling is likely to remain under downside pressure – Commerzbank

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The Bank of England (BoE) hiked by 50 bps for a second consecutive meeting, taking Bank Rate up to 2.25%. There is hope on the market that a larger rate step has merely been postponed but economists at Commerzbank remain sceptical. Therefore, sterling’s weakness is set to linger.

“I would remain cautious as a sterling investor as market hopes that the BoE will act more decisively in the future might be disappointed once again. Moreover, the fiscal policy measures (more on this when the mini-budget is presented today) mean that government debt is rising – a further negative factor for sterling.”

“Sterling’s recent recovery is likely to be only a short breather, as the currency is likely to remain under downside pressure.”

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