TD Research discusses GBP outlook in light of today's BoE policy decision.
"While it may not have been a consensus view, we think the lack of a hawkish dissent this month meant that investors did not have enough conviction to push sterling one way or the other. The BoE may be setting themselves up for a hike later this year though they need a few things to go right to deliver. We think this will help provide sterling with a modest tailwind in the weeks ahead, but we do not think it will become the single defining characteristic of the GBP," TD notes.
"Taking a step back, the BoE is now the second G10 central bank in as many days to hold the line against further steps down the dovish path. While we fully expected this from the BoE, we are wondering if this could be the start of a broader trend. More important, naturally, will be to see whether this pivot to a more neutral stance is echoed by the larger institutions - the ECB in particular. Ahead of this, we think that cable is likely to track the broader USD overall.
For GBP, the 1.30 level remains an important pivot and our Q2 forecast. We still like buying dips in EURGBP given the scope for positioning to unwind," TD adds.