BOE seen pausing June 19 – BBH

GBP/USD is firm just under key resistance at 1.3600. UK inflation expectations were anchored in May, BBH FX analysts report.

60bps of cuts still priced over 12 months

"The BOE’s Decision Maker Panel (DMP) survey showed 1-year expectations dipped to 3.0% (consensus: 3.2%) vs. 3.1% in April and 3-year expectations printed at 2.7% for a second consecutive month. Both series are still above their series lows of 2.5% in October 2024 and will likely keep the Bank of England (BOE) on a cautious easing path."

"Indeed, the BOE is expected to pause easing at the next June 19 meeting. Looking ahead, the swaps market continues to imply 60bps of cuts over the next 12 months and the policy rate to bottom between 3.50% and 3.75%."

"The Office for National Statistics (ONS) flagged an error to its April CPI report but that won’t shift the dial on BOE rate expectations. According to the ONS, April headline CPI was revised down by 0.1pts to 3.4% y/y, aligning with the BOE’s projection and down from the initial 3.5% print."