British Pound: Fiscal tightening risks dovish BOE repricing – BBH
BBH’s Elias Haddad highlights that Pound gains were supported by an upward revision to UK Q2 GDP, with growth beating both prior estimates and Bank of England (BOE) forecasts.
British Pound gains were bolstered by an upward revision to the UK's Q2 GDP, as the economy outpaced both prior estimates and Bank of England forecasts. However, BBH's Elias Haddad warns that the focus is shifting towards the upcoming October 28 Autumn Budget, where anticipated tax increases and spending reductions could diminish the likelihood of BOE rate hikes, potentially leaving the GBP vulnerable to a dovish repricing of monetary policy.
The tighter fiscal policy expected during the budget could reduce the need for the BOE to implement the 100 basis points of rate increases anticipated over the next twelve months, leaving the GBP exposed to a more accommodative monetary stance from the BOE.
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