The central bank left its rate at 0.5 percent as expected and raised growth and inflation forecasts. While the pound was boosted by the central bank’s tone, sterling could see gains tempered by the fact the BOE’s policy path remains closely tied to progress in the Brexit talks, according to Viraj Patel, a currency strategist at ING Groep NV.
In a press conference, Governor Mark Carney said that while the bank sees more tightening than it did in November, this was a “crucial” year for the Brexit negotiations and everyone would be better informed next year, which would have an effect on the central bank’s thinking. Rises will be gradual and the bank is not tied to a specific rate path, he said.
It was a “Brexit-contingent hawkish signal,” said Patel, among the most bullish forecasters on the pound. The greater prospect of a rate increase in coming months “reinforces our $1.45 target for cable in the first quarter of 2018.”
Jacob Rees-Mogg has the wonderful luxury of not holding a ministerial position and can therefore say whatever he wishes. That straight-talking manner has made him a champion of the Conservative’s Brexit camp. Theresa May continues to walk a fine line between appeasing warring factions within her own party while also needing to keep Northern Ireland’s DUP onside in order to maintain her majority.Click HERE to subscribe to Fuller Treacy Money Back to top