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BoE expected to hold rates, risking dovish repricing for sterling

ING expects the BoE to keep policy unchanged with a 7-2 vote and says contained inflation projections could trigger unwinds of some of the 38bp tightening already priced by year-end.

Reported · Written up by our desk · Central Banks

ING’s Francesco Pesole expects the Bank of England to leave rates unchanged at its upcoming meeting, with a 7-2 vote still the base case even as Catherine Mann could join Huw Pill and Megan Greene to support a hike.

Pesole’s view is tied to contained inflation projections, which he argues would strengthen the case for holding tighter policy for the rest of the year. He added that this scenario could lead markets to unwind part of the 38bp of tightening that is currently priced by year-end.

FXStreet also noted that the focus of the meeting would be whether support for tighter policy broadens within the BoE’s Monetary Policy Committee, with energy prices flagged as an upside risk for inflation.

Traders are positioning ahead of the BoE decision as well as upcoming Fed policy announcements, while sterling is described as sensitive to the rate expectations shift. The piece also references GBP/USD trading around 1.3350 in European trading.

Latest closeGBP/USD 1.332 ▼0.4%

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