ICYMI, the Bank of England on 17 March:
- Cable drops a full cent after the Bank of England hikes rates
- BOE raises bank rate by 25 bps from 0.50% to 0.75%
Snippet now via TD on the meeting and GBP outlook:
- As expected, the MPC voted to raise Bank Rate by 25bps today.
- However, the messaging around the hike took a notably softer tone, with the MPC not committing as forcefully to future hikes. We continue to expect a hike in May before a long pause to 2023.
- We think rallies will be brief and prefer to buy EUR/GBP dips towards 0.83 rather than chasing the rally now.
- We think that the dovish pivot, and hawkish Fed shift, imply a push below 1.30 for GBP/USD in Q2.
- “A range of factors (BoE repricing, higher oil, rising stagflation risks, diverging monetary policy and growth expectations) point to a deteriorating backdrop and underperformance against the likes of USD and EUR.
GBP update:
