The Bank of England (BoE) seems to remain hesitant in the fight against inflation. For this reason, Commerzbank economists expect the British pound to decline in the coming months.
Hesitant performance in the fight against inflation
“The BoE raised its key rate by an impressive 75 basis points, to 3%. But it put a damper on expectations that it could proceed at this speed. According to the BoE, key rates likely to peak below market expectations“.
“It remains to be seen whether inflation falls in the coming months as the BoE expects. Even the bank itself admits that this is very uncertain. It even sees the risk for inflation to rise. In this context, the question arises as to whether it has It makes no sense to dampen rate hike expectations already at this stage.”
“As it is hard to imagine the BoE’s stance changing, sterling is likely to trend down in the coming months“.
Source: Fx Street
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