GBP: Sterling pressured as BoE seen on hold – Societe Generale

Societe Generale’s Kenneth Broux expects the Bank of England to keep rates unchanged while warning on upside inflation risks, with markets now pricing the next move as a hike. GBP/USD has been declining and faces key resistance at the 50-DMA near 1.3485/1.3500, while support lies at 1.3140 and 1.3000.

Sterling soft with hawkish BoE pricing

"The BoE will most likely follow in the same hawkish vein and keep rates on hold, warning of the upside risk to inflation. Does the MPC vote 9-0 or will doves represented by Dhingra (sole dissenter?) maintain their view for lower rates."

"Money markets have shelved rates cuts entirely for this year and believe the next move is up (Dec-25 +21bp). Our house call remains for three cuts, backed by our base case for a decline in Brent back to $70/b."

"GBP/USD has experienced a steady decline recently and it will be important to observe whether it can reclaim the 50-DMA near 1.3485/1.3500; next supports are at 1.3140 and last November low of 1.3000."

"EUR/GBP is tentatively defending the trough of February at 0.8610; break through this may trigger a deeper decline; the 200-DMA near 0.8690 could be a near term hurdle."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)