Yesterday, the Bank of England held rates, as was widely expected, at 4.5% and the meeting was perceived as hawkish, given that this time we only had one member vote for a rate cut. GBP pushed on marginally higher as markets adjusted rate cuts for this year from 55bp to 45bp. But the gains were not sustained, suggesting markets are comfortable with pricing-in only two rate cuts this year.
Read more about the BoE's interest rate decisions here: When is the next BoE interest rate decision?
*Daily move - against G10 rates at 7:30am, 21.03.25
** Indicative rates - interbank rates at 7:30am, 21.03.25
A blow for GBP this morning with news out suggesting that UK borrowing forecasts for this fiscal year are expected to overshoot by £20b, highlighting the fragile state of the UK’s public finances ahead of the Spring Budget (Spring Statement) next week. Chancellor Rachel Reeves is likely to announce billions of pounds of cuts to public spending and welfare on the 26th March, which is likely to be seen as another blow to the economy.
Read more about the upcoming Spring Statement here: When is the Spring Statement?
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