GBP flows: GBP slightly firmer after BoE leaves rates unchanged
An 8-1 vote for no change with only one dissenting dove rather than the two expected by the consensus has helped GBP a little higher, but the statement is fairly neutral.
There was only one vote for a rate cut at the BoE MPC meeting, against the market consensus for 2, and GBP has risen slightly as a consequence, with EUR/GBP down around 10 pips to 0.8365. The statement was nevertheless much as expected and fairly balanced, noting some short term price pressures but also some weakness in survey data and expectations of easing in wage pressure over the year. We wouldn’t change our view of three rate cuts this year based on the statement. The market only currently prices two cuts, so there is scope for GBP to fall back if the market moves into line with our view. However, we wouldn’t look for much GBP reaction today.
