British Pound: BoE on hold sparks Sterling softness – Danske Bank

Danske Bank’s Danske Research Team highlights that the Bank of England left Bank Rate at 3.75% with a 6-3 vote, disappointing hawkish market expectations and triggering GBP weakness and lower rates. Quantitative tightening plans matched guidance, while the MPC acknowledged higher upside inflation risks but elevated uncertainty. Danske Bank keeps its forecast for no change this year and a June rate cut, with rising risk of a Q4 hike.

BoE pause weighs on Pound

"In the UK, the Bank of England kept the Bank Rate unchanged at 3.75%, in line with expectations, with a 6-3 vote as Pill, Greene and Mann again backed a hike."

"The decision was broadly as expected but given the very hawkish market pricing going into the meeting, the outcome triggered some GBP weakness and lower rates."

"The QT announcement was also close to expectations, with the remaining stock set to be unwound at an annual average pace of GBP 46bn by the end of 2034."

"Overall, the MPC acknowledged that upside risks to the inflation outlook have increased since July but also stressed that uncertainty remains very high."

"We maintain our call for unchanged Bank Rate this year and a rate cut in June. The risk is however increasingly skewed towards a hike in Q4."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)