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Mar 21 - 02:55 PM

Danske: BoE Poised for June Rate Cut, Maintains Short GBP/USD Position

By eFXdata  —  Mar 21 - 11:35 AM


In the wake of the March Bank of England (BoE) meeting, Danske Bank maintains its expectation for a BoE rate cut in June 2024, reinforcing its bearish stance on GBP/USD. Despite the unanimous decision to maintain the Bank Rate at 5.25%, the shift in vote dynamics and dovish signals in the statement suggest the BoE is laying the groundwork for an upcoming rate reduction cycle.

Key Points:

  • Vote Split Shift: The meeting saw a change in the committee's stance, moving from a 6-2-1 split in favor of maintaining rates to an 8-1 split, signaling a dovish pivot.
  • Dovish BoE Statement: The BoE acknowledged that monetary policy could remain restrictive even with a rate cut, indicating openness to easing in the near future.
  • Expectation for June Cut: Based on the BoE's current trajectory and upcoming economic data, Danske forecasts a 25bp rate cut in June, with a total of 75bp cuts anticipated for 2024.
  • Market Pricing and GBP Outlook: Markets are closely aligned with Danske's expectations, pricing in 77bp of cuts for 2024. Danske sees this as an opportune moment to maintain a short position on GBP/USD, forecasting EUR/GBP to move towards 0.88.


The Bank of England's latest policy decision and accompanying statements signal a cautious yet dovish shift, preparing the groundwork for a rate cut cycle commencing in June 2024. With inflation and wage growth expected to stabilize, and the UK economy showing signs of weakening, Danske Bank views the conditions as ripe for a policy easing. This outlook underpins their recommendation to stay short on GBP/USD, anticipating further GBP depreciation against both the EUR and USD in the coming months.

Danske Research/Market Commentary


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