Stable GBP Awaits BoE Meeting; Rate Cut Odds Surge
Solid ECN - The British currency has found stability above $1.27 as market participants anticipate the Bank of England's initial policy meeting of 2024, scheduled for later this week. Current market consensus indicates that the bank rate is unlikely to change. However, investors will pay close attention to how the committee members cast their votes and the details of the statement that follows. During their last meeting in December, three members favored raising the rate by 25 basis points, hinting at the possibility of future policy tightening.
Yet, recent economic indicators, including lower-than-expected inflation and declining wage growth, hint at a potential shift in the central bank's next steps, possibly toward reducing borrowing costs. Current market predictions suggest a 42% chance of a rate reduction in May, with the likelihood increasing to 74% by June.