GBP: Hawkish BoE repricing underpins Pound – MUFG
MUFG highlights that United Kingdom (UK) rate expectations have flipped from cuts to a possible hike as the energy shock lifts inflation risks, supporting recent Pound Sterling (GBP) outperformance versus European peers. The Bank of England (BoE) is expected to keep rates on hold but signal concern over persistent price pressures, leaving the Pound sensitive to evolving policy guidance and energy developments.
BoE seen on hold but more hawkish
"Rate cut expectations have been scaled back even more sharply for the BoE. The UK rates market has performed an abrupt U‑turn, shifting to price the next policy move as a hike, with around 13bps of tightening priced in by year end, compared with two full rate cuts priced before the Middle East conflict."