The Bank of England’s decision is coming up. According to MUFG Bank experts, any indications of a delay could cause the Pound to fall, although at lower levels, GBP would swiftly attract new investment to reduce the severity of the slide.
Perhaps a change in direction to suggest a break
We would undoubtedly contend that today’s hike is unnecessary, and a close call may further polarise the MPC. We’ll be keeping an eye on how the policy guideline is worded. In February, the MPC declared that “additional tightening in monetary policy would be required” if “signs of more persistent pressures were to emerge.” If inflation pressures do as the BoE anticipates, the conditionality of this guidance might be reversed to indicate a pause.
“A signal of a pause at this point would see rates fall and send GBP lower too, although we anticipate at lower levels GBP would swiftly attract fresh purchasing to limit the degree of depreciation,” the report said.
Any drop in the value of the pound is probably a good time to buy.