The Bank of England is likely to have finished raising rates and the combination of weak activity and a weakened labor market will weigh on the British pound in the short term, economists at CIBC Capital Markets report.
The BoE has finished raising rates, but will leave the door ajar
Having kept rates unchanged in September, it appears that the BoE is aware of the delayed impact of the 515 basis points of adjustment accumulated so far in the cycle. In fact, we now assume that the BoE is likely to have concluded its tightening policy.
The UK rate spectrum remains dependent on inflation expectations and growth assumptions.
Reduced expectations for final rates, combined with data challenges, suggest that the GBP will continue to face challenges at the end of the year.
GBP/USD: -Q4 2023: 1.19 | first quarter of 2024: 1.21
Source: Fx Street
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