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Good for the pound! Trading MT4.MT5 GBP Trend Forecast

发布时间：2022-08-25 浏览：119

The latest analysis shows that Bank of England Governor Andrew Bailey has turned "hawkish" and will raise interest rates twice in a row by 50 basis points.

 

On July 20, Berenberg senior economist Kallum Pickering said in a recent speech that Bailey had actually signaled that the pace of rate hikes by the Bank of England would accelerate. Pickering said Bailey's vote would effectively prompt other members of the Monetary Policy Committee (MPC) to take more aggressive rate hikes.

 

Berenberg has argued in recent months that a faster pace of rate hikes by the Bank of England will ultimately depend on a key vote by Bailey himself. He now sees a 50bps rate hike by the Bank of England as the most likely outcome (up from 25bps previously) at its Aug. 4 and Sept. 15 meetings.

 

Bailey's remarks came a day after the Office for National Statistics (ONS) reported that UK inflation rose 9.4% year-on-year in June, beating market expectations of 9.3% and up from 9.1% in May. Inflation in the UK is well above the central bank's 2.0% target, in line with concerns expressed by Bailey in his speech, where he said "we think the balance of risks to inflation is on the upside".

 

Inflation is almost certain to breach the 10% mark by the end of the year, economists say.

 

The National Institute for Economic and Social Research (NIESR) forecasts annual CPI inflation in the UK will peak near 11% in late 2022/early 2023 and remain above target until 2023 due to the hike in the energy price cap.

 

Pickering said: “While Bailey did not provide any signal for September, inflation is likely to still be rising before a peak in October when the household energy price cap is raised again, and we expect the BoE to be at least in the second half of the year. The rate hike of 50 basis points is maintained at the next meeting."

 

But Berenberg believes that the Bank of England will soon stop raising interest rates and will cut rates in 2023. They expect bank rates to peak at 2.5% in November, not in the second quarter of 2023 as previously expected.

 

They now forecast that the Bank of England will remain on hold in the first half of 2023 and continue to expect a 50 basis point cut in the second half of 2023 and another 50 basis points in the first half of 2024 to bring the bank rate to 1.5% by the end of 2024.