Trading the pound may be all about getting the BOE and rates markets right at the moment -- some analysts even say the transmission mechanism for Brexit to impact the currency is via the rates market at present. Without a press conference, the BOE seems unlikely to hike at next week's meeting, but it feels like another move is coming pretty soon (the market see 2% chance for next week, but an 80% likelihood for May).
The question is whether the economy can cope with a series of hikes, or whether a move to rein in inflation will actually squidge U.K. growth. Two reasons to be concerned are out there on the wire -- this one on how the some of poorest members of society will be hit hardest by hikes -- and this one on increasing defaults on car loans. If the BOE either turns more cautious or does dent growth, GBP could be right back under pressure.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadhziev
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