British Pound: Pound hit by BoE hold and cautious outlook – UOB
UOB Global Economics & Markets Research reports that GBP/USD fell sharply after the Bank of England left rates unchanged at 3.75%, before trimming losses to trade near 1.3236. The BOE decision saw a 7–2 vote, with two members preferring a hike to 4.00%. UK labour data showed slightly lower unemployment and still-firm wage growth, complicating the policy outlook.
Sterling soft after split BoE decision
"The Bank of England (BOE) held the Bank rate unchanged at 3.75% on Thu, as policymakers continue to balance the need to address above-target inflation with lackluster economic growth. The decision to hold was backed by seven of the nine Monetary Policy Committee (MPC) members at the May meeting. BOE chief economist Huw Pill and Megan Greene, an external member of the rates-setting MPC, were the two dissenting voices, casting votes to hike the BOE’s “base rate” by 25 bps to 4.00%."
"The US dollar extended gains on Thu to its highest in more than a year after a hawkish hold from the Fed triggered bets on rate hikes. The US dollar index (DXY) surged and closed at a one-year high at 100.85 (+0.76%). EUR/USD extended its sharp decline from the previous session to close at 1.1456 (-0.37%). GBP/USD plummeted by 0.69% to 1.3205 following the BOE’s decision, before paring losses to trade around 1.3236."
"The UK’s unemployment rate edged lower to 4.9% in the three months to Apr, from 5.0% in Mar. Wage growth remains relatively firm, with regular pay rising 3.4% y/y, above expectations; and total pay closer to 4.4% y/y."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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