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Sep 13 - 10:55 AM

GBP: BoE To Vote 7-1 For A 50bps Hike Next Week; GBP Structural Headwinds Mounting - BofA

By eFXdata  —  Sep 13 - 09:41 AM

Bank of America Global Research discusses its expectations for next week's September BoE policy meeting.

"We expect the Bank of England (BoE) to vote 1-7-1 vote in favour of a 50bp Bank Rate hike next week. We look for Silvana Tenreyro to support a 25bp hike and Catharine Mann a 75bp hike. We expect the BoE to continue guiding to continued hikes and to note the importance of future fiscal announcements," BofA notes. 

"Our G10 FX strategist points to downside risks to the sterling. Another 5% trade-weighted sterling fall from here, for instance, could in our view raise medium-term inflation another 40-50bp. That would necessitate perhaps two more 25bp rate hikes. A larger depreciation could have a bigger impact on the BoE's policy choices. We see the BoE as reactive rather than proactive on the currency. Potential sterling falls pose upside risks to our rate forecast," BofA adds. 

Source:
BofA Global Research

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