The pound could extend its recent gains in the wake of the Bank of England’s decision to cut interest rates by 25 basis points on Thursday, according to strategists at TD Securities.
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The move, which took the bank rate lower in a narrow 5–4 vote, was accompanied by a notable split among policymakers, with four members favouring no change.
TD Securities said the lack of urgency for additional easing, reflected in the vote split and the BOE’s overall tone, is lending support to sterling.
- “We see further sterling upside in the remainder of the year,” the bank wrote in a note to clients.
The currency’s outlook is also being underpinned by expectations of U.S. dollar weakness. TD forecasts the Federal Reserve will cut rates two to three times before year-end, which would narrow the interest rate differential and add to upward pressure on GBP/USD.
This article was written by Eamonn Sheridan at investinglive.com.