BoE’s Hawkish Stance Broadens, Pound Softens on US Yields
| Pair | Now | Since publish |
|---|---|---|
| GBPUSD | — | — |
| GBPJPY | — | — |
| GBPCHF | — | — |
- BoE’s Ramsden, Breeden, Lombardelli signal potential rate hikes amid inflation risks.
- BoE split on 3.75% rate; some who held now favor hike, others backed 4%.
- GBP/USD near 1.3250, pressured by strong USD and US yields above 5%.
Bank of England (BoE) Deputy Governor Dave Ramsden stated on Monday that risks to the inflation outlook have become increasingly tilted to the upside, signaling a potential case for raising the bank rate if these pressures continue to build. Ramsden highlighted external factors such as energy prices, weather, and AI supply chains, alongside domestic concerns like food prices and potential second-round effects. He also reiterated that further Quantitative Easing is not anticipated. This follows the BoE’s recent decision to hold the Bank Rate at 3.75% by a 6-3 vote, with three members advocating for a 25 basis point hike. The Monetary Policy Committee (MPC) previously warned that inflation could reach around 3.75% in Q4 2026 and slightly above 4% in Q1 2027 if elevated energy prices persist. In response to these hawkish signals, the British Pound (GBP) gained against most major currency peers on Monday, rising 0.13% against the US Dollar (USD) to trade near 1.3256.
BoE Deputy Governors Breeden and Lombardelli also indicated a case for raising the Bank Rate, following Deputy Governor Ramsden’s similar remarks on Monday. This broader hawkish sentiment among officials comes after the BoE held the Bank Rate at 3.75% on September 17 with a 6-3 vote, where half of the six who voted to hold now suggest a hike may be necessary. Chief Economist Pill and external members Greene and Mann had previously voted for a 4% rate in September. The GBP/USD pair initially closed just above 1.3250 for a second consecutive gain but later softened to near 1.3250 during early Asian trading on Tuesday, attributed to elevated US Treasury yields (above 5%) and a stronger US Dollar (USD).