Hesitant BoE to weigh on Sterling – Commerzbank
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Economists at Commerzbank note that the GBP could struggle as the Bank of England continues to merely react hesitantly.
“What is likely to be negative for Sterling is that the BoE continues to merely react hesitantly and might therefore risk its credibility when it comes to fighting inflation.”
“The market seems confirmed in its rate hike expectations following yesterday’s meeting. It is certainly pricing in at least one more rate hike step and with a slightly smaller likelihood even one after that. We see some potential for disappointment there.”
“In the end future data will be decisive for the BoE’s next rate decision though, in addition to the April inflation data the May data will also be published. If a swift fall were to become obvious here, as the BoE expects, it is likely to refrain from further rate hikes and that would put pressure on Sterling. However, the risk that the BoE will do more has certainly increased since yesterday.”
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