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Weekly Roundup: Pound undermined by revised BoE rate hike expectations

currency-newsWeekly Roundup: Pound undermined by revised BoE rate hike expectations
The pound stumbled last week as GBP investors continued to rein in their Bank of England (BoE) interest rate expectations.

The pullback in BoE Rate hike odds follows some alarming UK economic data in addition to increasingly cautious comments from the BoE policymakers in recent weeks.

The second half of the week saw Sterling pressured by reports that business insolvencies in the UK more than doubled so far in 2022 as they face surging costs.

This stoked additional fears that the UK could be headed towards a recession over the summer.

Looking ahead, the spotlight for GBP investors will undoubtedly be on the BoE’s latest interest rate decision.

The BoE is widely expected to deliver its fourth consecutive interest rate hike when it concludes its May policy meeting on Thursday.Given the hike is largely priced in the focus will be on the bank’s forward guidance.

This could see Sterling weaken further if the BoE signals it will not signal additional rate hikes over the summer as GBP investors had previously hoped.

Of course, given the BoE’s reputation for being an ‘unreliable boyfriend’ there remains a risk the bank could leave its monetary policy unchanged, a decision which would result in an even sharper drop in the pound.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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