The Bank of England (BoE) raised its benchmark rate by 50 basis points to 4%, but notably softened its statement. The British pound came under strong selling pressure after the event. Commerzbank economists expect further GBP weakness.
BoE signals rate hikes will end soon
“It became clear that the BoE is pretty close to the end of its rate hike cycle“.
“It seems that the BoE may have come to the communication break a little too early, with inflation in double digits, and whether it eases as quickly after all remains to be seen. The labor market seemed quite robust so far and the news of the strikes indicates that the risk of rising wages remains quite real..”
“While the BoE left the door open for further rate hikes, a more aggressive approach would have been desirable from a currency market point of view in view of the heightened uncertainty. In this context, it is not surprising that sterling eased and we think further weakness is likely.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
