Bank of England leaves interest rates unchanged – Commerzbank

As expected, the Bank of England (BoE) left interest rates unchanged yesterday, Commerzbank's FX analyst Michael Pfister notes.

Next BoE cut likely in August

"However, it became clear from the details released that the next interest rate cut is likely to come in August. Although there were no new forecasts or a major press conference, yesterday's vote was surprisingly close at 6–3. Bearing in mind that the BoE governor usually votes with the majority, this was a close call."

"In addition, the statement contained subtle hints that growth remains weak and that the labour market is cooling. Our economists predicted an interest rate cut in August at the end of last year, and following yesterday's decision, this is likely to become the base scenario for the market."

"Although further interest rate cuts are to be made 'gradually', the market is likely to increasingly price in stronger cuts following the recent weaker data and the BoE's increasingly dovish stance. This is not a good sign for the pound."