Despite a hawkish unanimous vote from the Bank of England, the British Pound remains capped as Commerzbank predicts a policy pause until February, dampening investor enthusiasm.
The BoE delivered a unanimous hawkish rate hike with Mann even voting for 50bp, yet the pound gave up its gains because almost three further hikes were already priced in and Bailey gave no timetable. Commerzbank sees no second hike until February, so the pound is likely to struggle to trade higher in the meantime.
Markets had already priced in almost three further rate rises by the middle of next year, and Governor Bailey gave no timetable for hikes beyond the next one, so the pound only rose briefly before giving up its gains.
Commerzbank firmly expects the BoE to wait until February rather than raise again in December, and sees the pound struggling to trade higher until then.
The British Pound failed to sustain gains following a hawkish Bank of England rate decision. While policymakers voted unanimously for a hike, markets had already priced in aggressive tightening, and Governor Andrew Bailey provided no clear timetable for future moves. Commerzbank analysts expect the central bank to pause until February, limiting near-term upside for Sterling.
Markets had already priced in almost three further rate rises by the middle of next year, and Governor Bailey gave no timetable for hikes beyond the next one, so the pound only rose briefly before giving up its gains.
Commerzbank firmly expects the BoE to wait until February rather than raise again in December, and sees the pound struggling to trade higher until then.