TD warn of extra Financial institution of England price cuts than the marekt expects – to weigh on GBP

GBP could face strain because the Financial institution of England (BOE) may lower rates of interest extra aggressively than markets anticipate, in line with TD Securities strategists in a notice from late final week.

Whereas latest stronger-than-expected UK financial information has led them to push again their forecast for the following BOE price lower to Could as a substitute of March, they nonetheless count on a complete 125 foundation factors of cuts this yr, together with the 25bp discount in February.

• At present, markets are pricing in round solely 50bp of further cuts for 2024.

Regardless of this, investor sentiment towards sterling stays upbeat, leaving it weak to a possible downward correction if expectations shift.

Moreover, TD add, uncertainty over potential tariffs from a second Trump presidency may add additional strain on the risk-sensitive pound towards the greenback.

This text was written by Aaron Cutchburt at www.ubaidahsan.com.



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