A snippet from RBC on what they see for the Bank of England and cable ahead.
On the BoE, RBC say that the terminal rate of approximately 6% “priced into the market (including moves of at least 100 bps at each of the remaining two meetings this year)” is not tenable, its too aggressive.
RBS project:
- a 75 bps hike in November, which is enough for the BoE to “send a message”
- 50 bps increase in December
- raise their terminal Bank Rate forecast to 3.75% (was at 3%).
- add they think the beginning of QT will be delayed past October
On GBP/USD:
- (the recent multi-decade low) “could be re-tested in the coming months“
- Government energy support will help households but won’t fix the UK’s current account and budget deficits, and some currency adjustment will be needed to attract capital inflows.
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I posted earlier in the week that: