Sterling to trend weaker over the coming months – Commerzbank

The Bank of England (BoE) still seems hesitant in the fight against inflation. Therefore, economists at Commerzbank expect the British Pound to edge lower over the coming months.

Acting hesitantly when it comes to fighting inflation

“The BoE hiked its key rate by an impressive 75 bps to 3%. But it put a dampener on expectations that it might proceed at this speed. According to the BoE key rates are likely to peak below market expectations.”

“It will yet have to be seen whether inflation will fall over the coming months as expected by the BoE. Even the bank itself admits that this is very uncertain. It even sees the risk for inflation on the upside. Against this background, the question arises whether it makes sense to dampen rate hike expectations already at this stage.”

“As it is difficult to imagine that the BoE’s stance will change Sterling is likely to trend weaker over the coming months.”