The Bank of England adopts a hawkish outlook, but the upward movement of the pound faces resistance.
智通财经2026/10/16 09:36Show original
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- Institutional viewpoints indicate that speeches by Bank of England officials this week reinforced the judgment that the market-implied central bank path is overly hawkish.
- The market has fully priced in a rate hike in November, and the probability of another hike in December is around 50%; the interest rate curve implies four hikes in the next 12 months.
- If even the most hawkish Bank of England officials are questioning the pace of tightening, it suggests that market expectations have moved ahead of policymakers.
- The risk is that the Bank of England is unlikely to be more hawkish than the market; a single rate hike is unlikely to be an unambiguous positive for the pound. Asymmetric risks on the interest rate curve favor a dovish repricing.
- The pound's muted reaction to these officials slightly pushing back against market pricing suggests that, aside from volatility around the decision itself, this may not become a key driver of the overall pound trend. Next week's inflation data will provide clearer guidance.
- The pound remains one of the higher-yielding currencies within the G10 group. As long as UK economic growth remains steady, carry trade demand should keep corrections relatively shallow, especially against the euro.
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