BOE PREVIEW: GBP COULD COME UNDER PRESSURE DEPENDING ON NEW INFLATION FORECASTS AND THE VOTE – COMMERZBANK

Bank of England’s (BoE) decision promises to be interesting. Michael Pfister, FX Analyst at Commerzbank, analyzes Pound Sterling’s (GBP) outlook ahead of the policy meeting.

Caution remains necessary

Depending on the outcome of the new inflation forecasts and the vote, the Pound could come under more or less pressure today. 

If the BoE lowers the forecast significantly and at the same time two council members vote in favor of a rate cut, the Pound could come under considerable pressure. However, I would expect the BoE to hold off with such clear signs of an imminent turnaround on interest rates. After all, the BoE is likely to remember the recent inflation surprise. 

If BoE Governor Andrew Bailey is able to continue to convince the market that the BoE is taking a cautious approach, then my cautious optimism for the Pound doesn't look so bad.