GBP to ease again quickly if BoE does not meet expectations – Commerzbank

Economists at Commerzbank preview the Bank of England (BoE) meeting and its implications for the British Pound (GBP).

Will the BoE meet market expectations?

“In view of continued high inflation rates in the United Kingdom the market assumes that the Bank of England (BoE) will hike its key rate by a further 75 bp until the summer, including today’s step.”

“At today’s BoE meeting, it will likely be less the step itself that will be decisive for Sterling, as it is priced in, but instead the voting patterns amongst the committee members and possible indications as to its future monetary policy.”

“If the BoE does not meet these expectations of a restrictive approach today because it fears that the past rate hikes might significantly affect the economy, even though it has stood up quite well contrary to its expectations, Sterling will presumably ease again quite quickly.”