Sterling under pressure as the BoE faces a vote of no confidence

GBP

The pound remained subdued after the release of UK GDP data, which saw the economy grow by 0.5% in October and came in above market expectations of 0.1%.

Sterling remains under pressure as the Bank of England faces a vote of no confidence on predicting inflation for the future. MPC members are unsure due to a big gap between market expectations for interest rates and the BoE’s own views on what will and won’t be necessary for inflation to eventually return to its 2% target, a gap that poses ongoing risk to Sterling.

With a 50 basis points interest rates rise set to be announced later this week, and further fiscal tightening likely for next year, the central bank is unlikely to go for an aggressive rate hike as this will further damage the UK economy.

Furthermore the pound could see volatility leading up to Thursday’s rate decision with employment and inflation data set to be released on Tuesday and Wednesday.

Key announcements

07:00 – GBP – GDP m/m – Actual 0.5% from previous -0.6%